Philip Davies: I thank the Minister for that reply. Will he consider providing some much-needed funding for Bradford area play association and Windhill community furniture store in my constituency and other small groups, which not only provide an invaluable service in the local area, but play an important recycling role by selling second-hand products that would otherwise be thrown away?

Peter Bone: Yesterday, I received a visit from Ricoh, a company in my constituency, which proposes to provide can crushers in schools for recycling. The profit from that would then be sent back to schools to fund projects. Can the Minister give that company any encouragement?

Ben Bradshaw: That sounds like an excellent idea. If the hon. Gentleman writes to me about it, I might be able to provide some advice on to how the company could get such an idea off the ground. Recycling of aluminium is a worthy project and it fetches a good price. One of the problems is that because it is a relatively light substance, many local authorities do not go to much effort to collect it because it does not count on their recycling targets. That is another issue that we hope to address in the waste review.

Greg Clark: Is the Minister aware of the work of the London ecology unit in establishing the critical importance of back gardens in promoting biodiversity in our urban settings? Those back gardens are being lost at an alarming rate through their classification as brownfield sites. How is it possible for him to have a credible biodiversity policy in urban areas when Ministers admit to me that they do not even know how much green space in our towns and cities is being lost every year in that way?

Colin Challen: I know that my hon. Friend will be very much aware of the concerns expressed by non-governmental organisations about the rapid development of palm oil and the impact of that on biodiversity and tropical deforestation. Is he having discussions with his colleagues in the Department of Trade and Industry and the Department for International Development to address this serious situation, and to ensure that we do not use palm oil from such sources?

Tony Lloyd: Whether we are talking about palm oil or the English apple in the context of monoculture, is not the role of the distribution system, and our supermarkets in particular, very damaging to biodiversity? Will the Minister take a serious look at the role of the supermarkets, talk to them, and see whether he can persuade them to wean themselves off monoculture?

Graham Allen: As we heard during the exchange about palm oil, none of the materials that we think are sustainable are without their own environmental consequences. We all want biofuels, but will the Minister make it clear that we will not denude our rainforests to create them, thus creating even more problems? When he examines the certification scheme on an international basis, will he ensure that it includes all the necessary safeguards, including safeguards for the producer—often an ordinary peasant farmer—who, on occasion, is the unwitting victim of our environmental policy?

Rob Marris: May I caution my hon. Friend on the matter of safeguards? Some people are driving around this country using used chip fat, for example, as a biofuel. Such materials do not get the 20 per cent. fuel discount, but they are incredibly polluting. We do not really know what is going into these vehicles—it could be just any old rubbish out of a chip pan. What steps are the Government taking, or proposing to take, to safeguard us from the worse air pollution that will result from the use of unauthorised, uncertified biofuels?

Ben Bradshaw: I and my ministerial colleague in the House of Lords are responsible for this area of policy. We have regular meetings with the British Egg Industry Council and the British Poultry Council, and we have met those bodies more often recently to discuss the threat from avian flu. However, I hope that I can reassure the hon. Lady by saying that consumption in this country of British-produced eggs and poultry is growing, a trend that is not evident in other countries. Again, we have to strike a balance between abiding by international and EU trade laws, from which we benefit as exporters, and encouraging people to support the British egg and poultry industries. As a whole, our domestic production is of a higher standard than that in the rest of the world.

Ben Bradshaw: I am sure that my hon. Friend will know that our procurement policies are legally constrained by the World Trade Organisation rules from which, as I just explained, we benefit as exporters. They are also constrained by EU rules, but I guess that my hon. Friend may be pleased to hear that the recent outbreaks of foot and mouth disease in Brazil have caused British imports of Brazilian beef to fall in the past few months. The lifting of our over-30-months scheme means that beef produced in this country that is over 30 years old—[Interruption.] I mean beef that is over 30 months old, which is now allowed to go on to the market, so the future for home-produced beef for domestic consumption and export is very rosy.

Michael Jack: Pursuant to the right hon. Lady's last answer, can she explain to the House—bearing in mind that her Department was the author of the version of the single farm policy that is being introduced into the United Kingdom—why the additional volumes of work that have occasioned the extra costs to occur, as mentioned by the hon. Member for North-West Leicestershire (David Taylor), and the problems that the RPA has experienced have been a direct result of what appears to be an unanticipated volume of work from a policy that she and her hon. Friends agreed?

Daniel Rogerson: As hon. Members have said, there have been a series of problems with farmers who have contacted the RPA over mapping and inaccuracies in letters that they have received. A lot of the contact that farmers have had has been unnecessary and would have been dealt with if the agency had been more efficient and dealt with each issue as it arose. Call centre staff, for example, were not briefed on the issues that farmers were raising with them. Does the Secretary of State intend to apologise to farmers in England for the inefficient way in which they have been treated?

Margaret Beckett: Over the past year, we have made it clear that we were concerned about some of the problems that became evident at the start of last year. It may not be within the hon. Gentleman's memory, but it will be within the memory of many other hon. Members, that it is now more than a year since we were forced to announce that we would not be able to begin payments until February. Those problems did arise some time ago and huge amounts of extra effort—including extra staff—have been put in. I remind the House that the IT programme is being monitored by the Office of Government Commerce in its gateway project, and it has said recently that it has been managed very professionally, with very visible ministerial and departmental support.

Margaret Beckett: Well, I would have thought that hon. Members might have welcomed that increase. I am not aware that there was any confusion. The hon. Gentleman will recall that we have been continually pressed to give assurances that if the RPA were not in a position to make full payments, partial payments would be made. It has always been the publicly stated position that some payments would begin to be made. We hoped that full payments would be made, but if that was not possible, partial payments would have to be made. However, nobody really wanted that, including the farming community, because of the complexities that it would cause.
	The hon. Gentleman says that it is a complicated scheme, but that is misconceived. The transition from 11 different schemes with different rules, payment dates and procedures, to a single scheme is complicated, but the scheme itself—once it is fully in place—will be simpler and we envisage that it will reduce the bureaucracy that farmers face by some 15 per cent., as well as giving an estimated £400 million to £500 million a year in extra income to the farming community in the longer term.

Bob Spink: The issue is that we must stop the virus mutating so that it can be transmitted from human to human, but it is likely to do so in those who are exposed to the virus—the workers in the industry. What discussions is the Minister holding with colleagues in other Departments to ensure that all workers in the poultry industry will be vaccinated as soon as possible?

Bill Wiggin: The report of the independent review on avian quarantine recommends that reverse transcription polymerase chain reaction be used as a method to detect avian influenza. Will the Minister confirm that it is his intention to use that system to detect avian flu? Bearing in mind what he has just said to my hon. Friend the Member for Castle Point (Bob Spink) about small poultry-keepers—people such as myself—surely it is worth having more than a voluntary register, which after all is still not open and will not be until 28 February, as people are more likely to bring their poultry into their own homes, thereby risking infection if information about the risk is not given to them.

Margaret Beckett: I have always thought that it was a peculiarly British trait to think that if something is really important it should be outside and above the political process. I am not quite sure what people think politics is about. Leaving that aside, I am delighted to welcome the cross-party consensus—that all parties are signed up to the targets that the Government set, and were challenged for doing so, some time ago. That is a wholly welcome development. However, I am never one to sign a blank cheque, so until I see the policies that are backing up the consensus that targets are highly desirable, I shall be keeping a watching brief.

Barry Sheerman: Although I congratulate my right hon. Friend on some of the tough decisions that she and the Government have made on reducing carbon dioxide emissions, may I urge her to look at some of the work that Urban Mines—an environmental charity that I chair—has been doing in trying to bring home to people the impact of the carbon footprint that they make on our planet? It is important to explain what the individual, the family and the corporation can do to lessen their carbon footprints. At every level, the carbon footprint is vital to our future. That means taking tough decisions, not those that the President of the United States alluded to a couple of days ago, because the fix will come not from technology, but from curbing and changing human behaviour.

Nick Hurd: About a quarter of emissions seep out of our own homes. Does the Secretary of State accept the widespread argument that, if we are to transform attitudes towards energy efficiency in our own homes, we need more of the simple tax breaks pioneered by the Conservative council in Braintree? If so, does she understand the widespread frustration that the Chancellor appears to be doggedly deaf to the argument?

Margaret Beckett: I take the hon. Gentleman's basic point completely: we could do a great deal more, not least in this country, where, historically, we have neglected energy efficiency. I cannot immediately call to mind the initiative taken by Braintree council, but I am conscious of the fact that the energy efficiency commitment has driven a lot of this work and that is, of course, something that the Government instigated and put resources into. With such measures and the Warm Front programme and so on, we are substantially stepping up what we do. He underestimates the figure—from memory, about 50 per cent. of our emissions come from our building stock—and it is important for all of us to address that, not least because it will cut people's fuel bills, as well making them warmer.

Margaret Beckett: So much for the cross-party consensus. However, the hon. Gentleman is right to say that, unfortunately, we have not been able to produce the climate change programme review as early as we had hoped, in no small part because it revealed further analysis that we wanted to do to ensure that the programme is as effective as we can make it. I tell him, perhaps somewhat gently, that there is no need for Labour Members to feel apologetic about saying yes about the 20 per cent. target, because every one of the major parties was challenged to include the target of a 20 per cent. reduction by 2010, not in some special little environmental leaflet, but in our mainstream manifestos. One did so: the Labour party.

Peter Ainsworth: I think that we are beginning to get to the bottom of the reason why the Government are reluctant to sign up to the cross-party agreement on climate change: they cannot even agree among themselves. Last week, the Department confirmed that UK CO 2 emissions had risen again. Earlier this week, the Prime Minister put his name to yet another pamphlet that said that the science on climate change was even worse and more threatening than we thought. Today, we learn that the Secretary of State's Department and the DTI cannot agree on the future levels of CO 2 with which they expect industry to deal, although industry needs that kind of uncertainty like a hole in the head. We also learned today that the Treasury has been forced by Friends of the Earth to rethink its policies and position on environmental reporting. May I put it to the Secretary of State that although I do not think that it is her fault, there is a real danger that the Government's approach towards this most important issue of all is becoming a complete shambles?

Elliot Morley: Costings for decommissioning have been published by the Nuclear Decommissioning Authority. As for the legacy issue of nuclear waste, costings are not yet available, because a preferred solution has not been decided. I am quite sure that, when there is agreement on that solution, there will be substantial costs which, of course, will be made public. When nuclear power was originally embarked on a long time ago, the very high costs of legacy, decommissioning and nuclear waste were not taken into account.

Elliot Morley: The hon. Gentleman clearly feels strongly about this issue, Mr. Speaker, but his concerns are premature. An energy review is under way, but there is a bit of an obsession with its nuclear energy component. It is right and proper that it should be part of the review, but issues such as costs and the energy mix will be taken into account and there will be an opportunity to comment. The hon. Gentleman said, perfectly reasonably, that there has not been a solution to the long-term storage of nuclear waste for decades. In the previous attempt, Nirex made a recommendation for deep storage which was the subject of a public inquiry in 1996, where it was turned down for various reasons. Personally, I did not think that the process was as open and inclusive as it should have been. We do not intend to make that mistake with Corwm, which has considered all the options and narrowed them down to a number—

Margaret Beckett: I rather share my hon. Friend's view. It is somewhat depressing that a substantial number of member states were wholly unwilling for any change to be made in production subsidies under pillar one. That had a knock-on effect on pillar two. That is why it was important to us to get the flexibility of further voluntary moves of moneys from production subsidy into other payments under this heading, because we believe that that is the right direction for farming not just in the UK, but right across the European Union. It is possible that, as a result of that additional flexibility, other member states, particularly among the new members, may be willing to undertake such moves, whereas they were not willing to do so before because all the modulation was compulsorily co-funded, and that presented them with a budget difficulty. My hon. Friend is right about the direction in which we believe funding should move and we will continue to press for it, as the UK did during the negotiations, although this was a presidency deal.

Edward Balls: My right hon. Friend the Secretary of State made it clear in an earlier answer that, to achieve progress on meeting our climate change objectives, we need measures and action rather than press statements and warm words. The climate change levy is such a measure. May I urge her not to wait for others to make proposals, but to lead an effort to build a cross-party consensus in support of the climate change levy, or does she think the position is hopeless?

Gregory Barker: A far more ambitious and radical strategy for renewable microgeneration and decentralised energy is essential to help Britain meet its long-term climate change targets, so apart from welcome first steps in the Climate Change and Sustainable Energy Bill going through Committee, why are the Government not doing more to actively promote market conditions in which new British microgeneration technologies can break out of their niche and into the mass domestic consumer market?

Mr. Speaker: Order. I am wondering what that has got to do with the business for next week.

Geoff Hoon: I am grateful to the right hon. Lady for her entertaining run through the current issues. I shall do my best to respond, although perhaps not in kind.
	I have made it clear that the date of the Budget will be announced as soon as the Government are ready to announce it.
	As far as the health debate is concerned, while that would clearly give informed, thoughtful, considerate Labour Members an opportunity to set out the excellent way in which the health service has been funded and reorganised in recent times, I am sure that we shall all be looking forward to discovering whatever is the latest policy from the Conservatives. It clearly will not be the policy on which hon. Members fought the last general election, since the Conservative party seems to be junking each and every piece of that policy not only week by week, but day by day. So perhaps it would be a good opportunity, although I remind the right hon. Lady that I announced a debate on health inequalities in Government time in direct response to the request that was made previously.
	As for the appointment of the Chancellor of the Duchy of Lancaster, perhaps I should refer the right hon. Lady to the answer that I gave last week, and indeed the week before that. I am not aware of any impending change in that regard. I am sure that the Under-Secretary of State for the Cabinet Office, my hon. Friend the Member for East Renfrewshire (Mr. Murphy), who has assumed those responsibilities, will continue to do the excellent job that he has been doing for some time and may well be doing for some time to come.
	On the education Bill, there are proper traditions about the time available to hon. Members for considering a Bill before Second Reading, and I see no reason why it should be necessary to depart from those traditions.
	I share the right hon. Lady's concern about the half-term recess dates, which I had a great deal of difficulty in trying to organise. Unfortunately, just over half the local authorities in the country have their half-term in the week commencing on 20 February and just under half have it in the week commencing on 13 February. It would clearly be helpful in the organisation of business if our local authorities could agree on a single period. I am sorry that the whipping for that particular week is likely to be high, but that reflects the Government's commitment to some rather important issues that have to be dealt with in that week. Notwithstanding determined efforts on all sides, it has not been possible to find a lighter work load for that period.

David Heath: Last week, when I asked the Leader of the House about the Government's Arbuthnott report, an expression of utter vacuity crossed his face, so this week I shall try to ask about subjects that he has at least heard of.
	Will the Leader of the House set aside two hours for statements—one from the Secretary of State for Environment, Food and Rural Affairs on why stringent controls on industry as regards carbon emissions are necessary, followed by another from the Secretary of State for Trade and Industry on why they are not? From that, we may be able to assess some form of coherent climate change strategy.
	May we have a debate or a statement on the Child Support Agency? We were told eight years ago that it was in urgent need of reform, and two months ago the Prime Minister himself said that it was not fit for purpose. We are still waiting for an announcement on the fundamental reform of the CSA that is clearly necessary.
	I understand the Leader of the House's difficulties with half-term coinciding with a week of business but does he believe that it is wise, given Tuesday's events, to schedule three controversial Bills for that week? Would it not be better to leave a little extra time for the Chief Whip to understand what is happening in the party and for the Prime Minister to plan his diary engagements?

Michael Spicer: Can the Leader of the House confirm that, by order of the House, the Senior Salaries Review Body is automatically bound to review Members' salaries this year?

Kate Hoey: Will the Leader of the House arrange for the Secretary of State for Work and Pensions to make a statement as soon as possible on the future of the Post Office card account? He will have seen early-day motion 1531.
	[That this House is gravely concerned by the Department of Work and Pensions' (DWP) decision to withdraw support for the Post Office Card Account when the existing contract expires in 2010 and in particular by the Department's attempt to kill off the Account in advance of 2010, through pilot schemes being introduced immediately when it will deny to new benefit claimants the option of opening a Post Office Card Account, inform 35,000 existing customers that they will have to use a bank or building society instead of the Post Office Card Account and require them to provide their account details, and pay benefits of 2,500 existing customers into a bank account rather than the Post Office Card Account, ignoring the preferences they made when their benefit books were stopped; condemns the fact that, in breach of all plans, these pilot schemes are being introduced without consultation; and calls on the Government to halt these pilot schemes immediately and to institute an immediate review of the DWP's proposal to abolish the Post Office Card Account by 2010.]
	It has attracted more than 100 signatures in 24 hours. With few days' consultation, the Department for Work and Pensions is introducing pilots in February that will make it difficult for several new people who are beginning to receive pensions or benefits to use the Post Office card account. That constitutes an out-and-out attack on the Post Office card account. It was mentioned last week and everyone is concerned. We need a statement. Will my right hon. Friend speak to the Secretary of State for Work and Pensions?

Geoff Hoon: I have always defended my hon. Friend's right to think for himself, even if the consequences have sometimes been difficult for some of my right hon. Friends. I am not going to have the debate now that I have set out for next Wednesday. The House will have the opportunity on that day to discuss the issues that my hon. Friend has raised, and then to decide, on a free vote—it is a House matter—whether the allowances should be restored or granted.

Alan Reid: To echo Members who have spoken previously, may we please have a statement on the disgraceful decision of the Department for Work and Pensions to abolish the Post Office card account? May we also have a debate and a vote on that? Surely, in view of the number of signatures on the early-day motion, the Government cannot abolish the card account without a vote in Parliament. Can we also have a debate on the implications for small post offices? The Royal Mail's universal service obligation gives little protection to rural post offices. For example, within the PA postcode area, the Royal Mail could shut every post office on every island in my constituency and still conform to the terms of the USO. That is completely unacceptable, and surely it must be altered.

Brian Jenkins: Will my right hon. Friend find some time, rather urgently, to allow the Department of Trade and Industry to explain to the House why it is spending money and resources on a cost-benefit analysis on the possible extension of Sunday trading? Such a move is not wanted by the majority of supermarkets, employees or the public, and judging by my early-day motion, might not secure the support of the House. Would it not have been better for the DTI to secure the support of the House in principle before expending that money, which could have been better spent on combating the erosion of British manufacturing jobs?

Geoff Hoon: Without challenging in any way the assumptions underlying my hon. Friend's question, it is important that we identify whether there is a demand from the public, supermarkets or other shops for a different arrangement for Sunday trading. I would have thought, given the premise of his question, that he would have welcomed the expenditure in order to identify more accurately the position on Sunday trading.

Geoff Hoon: I recognise that that is of grave concern to right hon. and hon. Members. It is important that answers are given as early as is possible, but I hope that the hon. Gentleman and other Members will accept that it is also important that Departments have the opportunity to produce accurate and detailed responses to such questions. From time to time, that necessitates the issuing of a holding answer. All Departments are made aware that that mechanism should only be used in specific and particular circumstances.

David Taylor: Student debt is a persistent and growing problem, and nowhere is that more true than in nursing and midwifery, which has a high attrition rate of almost a quarter because of financial problems. Early-day motion 197, tabled by the hon. Member for Calder Valley (Chris McCafferty) following a campaign by the Royal College of Midwives, drew attention to that, and called for a non-means-tested £10,000 bursary.
	[That this House recognises the vital role that midwives play in the NHS; notes that many student midwives face financial problems during their training and that according to the Royal College of Midwives' poll, around a fifth of midwives fail to complete their studies due to financial hardship; and therefore supports the RCM campaign to provide a £10,000 non-means tested bursary for all student midwives, ensuring more students are attracted to midwifery, are able to complete their course and go on to become practising midwives.]
	My constituent Andrea Simpson of Donington le Heath has compiled a very large petition online, which I hope to present to the House next week. Will the Leader of the House try to find an opportunity in the coming weeks for us to discuss that important aspect of finance for vocational training? People like my constituent are key to the provision of quality services in the NHS and elsewhere.

Charles Clarke: With permission, Mr Speaker, I should like to make a statement on the renewal of the Prevention of Terrorism Act 2005.
	I have today laid before Parliament Lord Carlile of Berriew's report on the operation of the control order regime under the Prevention of Terrorism Act 2005, and an order to extend the life of that Act for a further 12 months. I am very grateful to Lord Carlile—as I am sure the whole House will be—for the customary diligence and care with which he approached his task.
	Overall, I believe that the report endorses the current operation of the control order system. Paragraph 61 states:
	"As a last resort (only), in my view the control order system as operated currently in its non-derogating form is a justifiable and proportional safety valve for the proper protection of civil society."
	Lord Carlile also states, in paragraph 38, that in the 18 cases in which control orders have been made,
	"I would have reached the same decision as the Secretary of State in each case in which a control order has been made."
	Lord Carlile has made a number of recommendations to improve the operation of the control order regime, including the monitoring of each case to ensure that the restrictions imposed are the minimum necessary consistent with the safety of the public, and fuller information from the police about why they believe it would not be possible to mount a prosecution rather than relying on a control order. I have considered each of Lord Carlile's recommendations, and in principle I accept them. I am currently consulting, as required by the Act, with the Intelligence Services Commissioner and the director general of the Security Service, and will take their views into account before making final decisions, on which I will report to the House during the debates on the renewal order. No recommendation made by Lord Carlile requires primary legislation, and it is on that basis that I have laid the renewal order today. It will be fully debated in both Houses, and all Members will have an opportunity to debate Lord Carlile's report and our response to it. Of course I hope that the order will be supported.
	The last stage of the Prevention of Terrorism Act was a significant parliamentary occasion which all members of this House will remember well. During that debate, I made a commitment to timetable further counter-terrorism legislation for spring this year, so that Lord Carlile's report would be available to inform the House when it considered any amendments to the control order legislation. I gave that commitment in the context of an announcement I had already made that we would introduce legislation to give effect to new offences of terrorism. The House will know that the tragic events of 7 July changed the timetable for the introduction of that legislation. With the agreement of all parties, we decoupled that legislation from further parliamentary consideration of control orders and presented it in October, in the Terrorism Bill that is currently before Parliament. In July, I said that I would return to the issue of control orders in the spring.
	On receiving Lord Carlile's report, I was left to consider the merits of introducing a Bill that would have little content, but would enable hon. Members to table amendments to the Prevention of Terrorism Act. In doing so, I noted the following points.
	First, Lord Carlile's report emphasises that there has not yet been a complete cycle of control orders, in that legal challenges brought by those who have been the subject of control orders have not yet been completed and therefore tested in the courts. I think that final conclusions on the operation of the whole control order regime would therefore be premature.
	Secondly, there are three very important pieces of work that are being done this year, which I want to be able to take into account before presenting legislation on counter-terrorism. The first is Lord Carlile's review of the legislative definition of terrorism, which was promised during the passage of the Terrorism Bill and has been a significant part of the debate in both Houses of Parliament. The second is his report on the operation of the current Terrorism Bill, once passed, and in particular the measure to lengthen the period of detention without charge to 28 days, which has been the subject of great debate in both Houses. The third is the work that the Government are undertaking to find, if possible, a legal model that would provide the necessary safeguards to allow intercept material to be used as evidence. That has been raised in many parts of the House. Each of those pieces of work has been of considerable importance to Members in all parts of this House during our debates, and in my view will demand attention before we decide the details of how to proceed on terrorism legislation.
	I am conscious that our terrorism legislation is now split between several different Acts of Parliament, and that the principal Act, the Terrorism Act 2000, has been subject to multiple amendments. That, as Lord Carlile among others has noted, is confusing, and I am keen to ascertain whether a way could be found of consolidating all our counter-terrorism legislation in a single, permanent Act. When I expressed that hope on Third Reading of the Terrorism Bill on 10 November 2005, the Opposition parties were good enough to say that they might be prepared to co-operate in such an endeavour.
	For all those reasons, I have decided not to introduce further legislation on terrorism now, but to plan for the development of a draft Bill that takes into account all the work that I have laid out, to be published in the first half of 2007 for pre-legislative scrutiny. Depending on the outcome of that scrutiny, we will seek to introduce the legislation later that year.
	It is a matter of genuine regret to me that—despite very positive discussions between the parties at the beginning of last year, following the House of Lords judgment on Belmarsh, and during the summer of last year after 7 July—any consensus reached has never held during the passage of subsequent legislation. It is unarguable that it would be better by far if the next counter-terrorism Bill had the support of all parts of the House. The timetable that I have set out offers us that opportunity and for my part, I am determined to take it, working with the whole House.

David Davis: I begin by thanking the Home Secretary for making his statement to the House today, and for his courtesy in allowing me advance sight of the documents. My saying so is not just a formality—we were given serious advance sight of those documents.
	The review and renewal procedure for control orders is the consequence of the enormous battle that took place in the House of Commons before the last general election. In my judgment, it demonstrates that that debate, in which we heard brave and passionate contributions in defence of British freedoms from all parts of the House, was worth while. The Home Secretary was right to say that Lord Carlile's report is largely supportive of the Government's operation of the system, and that Lord Carlile felt that the process appeared to work. Indeed, he concluded that it was extremely rigorous, and that the Home Secretary took his personal responsibilities extremely seriously. If I may say so without embarrassing the Home Secretary, it is a reflection of his stature that not a single Member of the House will be surprised to learn that he took them seriously.
	That does not mean, of course, that the control order approach can replace proper judicial process, which is why it should be kept under review, minimised and in due course replaced. It is also why, in paragraph 37 of the report, Lord Carlile supports the use of intercept evidence—the Home Secretary referred to this—to bring criminal prosecutions in as many cases as possible. Lord Carlile points out that the Terrorism Bill, which is due to return to the House shortly, will allow us to try, and in due course to convict, terrorists more easily, and to reduce even further the need for control orders. Practical factors such as resources will, in time, also help with surveillance, for example.
	The report tells us that 18 control orders were issued last year, and that only one of them applies to a British citizen. I am glad to observe that that particular control order does not involve tagging or curfew, and that it allows the person in question to continue with his work. During the original debate, we expressed the worry that control orders could be destructive of people's lives.
	Nine of the men in question—they are all men—have been removed from the control order system and detained pending deportation, when and if the Government obtain memorandums of understanding with the relevant Governments. This raises two key questions that are not easy to answer, but which I shall put to the Home Secretary anyway. First, how will the Government deal with any legal challenge to deportations, made under the European convention on human rights, where a memorandum of understanding is achieved? Secondly, although the report does not say so in terms, it makes it clear that it is proving quite difficult to conclude those memorandums with certain countries, which is unsurprising. What do the Government intend to do if it proves impossible to conclude them?
	In paragraphs 71 and 72 of the report, Lord Carlile highlights his concerns, and those of the Joint Committee on Human Rights, at the prospect of control orders being renewed time and again. He says:
	"It would not be acceptable for significant restrictions on liberty to continue for years on end".
	What are the Home Secretary's views on that matter?
	Let me now turn to the wider issue of counter-terrorism legislation, which the Home Secretary referred to in his statement. He said that there is no requirement for primary legislation in Lord Carlile's review, but that is not quite right: paragraph 37 makes it clear that the law should be amended to allow limited use of intercept evidence. However, I accept that that will take some time to get right. I also believe that the Government are right to legislate on terrorism in a more deliberate manner. Indeed, I should tell the House—I do not think that I am breaking any confidence in doing so—that the Home Secretary and I have discussed at length the use of intercept evidence. My party did not press the matter in the Lords, on the understanding that the Government would make a serious attempt to devise a robust legal model to allow the safe use of intercept material in court. I am very pleased that the Home Secretary has confirmed that intention to the House today.
	I also welcome the Home Secretary's intention to rationalise terrorism legislation. This is not just a technical issue—Lord Carlile's report refers to confusion in this regard. Much anti-terrorism legislation was necessarily put together in haste and has proved unusable or unnecessary. Other such legislation appears to be being used for purposes beyond the original intention, or is being used far more than was intended. There were some 29,000 uses of Terrorism Act 2000 last year, for example. So there is great scope for rationalisation, including some pruning of current law, and we will do what we can to facilitate that process on a consensual basis. This is an issue of enormous national interest that involves serious matters such as striking a balance between protecting the security and liberty of the subject, and protecting and preserving our values, so we will be very constructive on it.
	However, let me offer a gentle comment—I will not say a rebuke—to the Home Secretary. He expressed disappointment at what he saw as a lack of consensus on the current legislation. There is a difference between a constructive, consensual approach and a supine acceptance of everything that the Prime Minister chooses to announce. We have defeated the Government on some major issues of principle, but they are just that: major issues of principle. As such, they have aroused the passionate concern of members of all the parties represented in this House, not just mine. That is as it should be and in my judgment, such concern has improved the legislation.
	The result of the positive discussions that the Home Secretary alluded to has been fewer clashes—certainly fewer unnecessary clashes—than would otherwise have occurred. The Bill itself is better and more wide-ranging than it would otherwise have been, and the Home Secretary will have key legislation earlier than would otherwise have been the case. After all, the timetable on which he is putting this legislation through was my suggestion, which was supported by the Liberal Democrats. So even though the outcome has not always been to his satisfaction—he is only human, so we cannot expect otherwise—it has in fact been good.
	The issues arising from the proposed legislation—the definition of terrorism, the 28-day detention without trial procedure, the use of intercept evidence—are all vital and we need to get them right. I agree that we need to take a measured and thoughtful approach; that ideally, we should proceed by way of consensus and not according to an unnecessarily hasty timetable; and that cross-party discussion would be useful. The Home Secretary will not expect me to give him a blank cheque, but I will make sure that my party does all in its power to ensure that the process that he described is effective and thorough and delivers anti-terrorism legislation that attracts the support of all parts of the House and, more importantly, really works to defend the lives and liberties of the British people.

Charles Clarke: I appreciate the right hon. Gentleman's constructive and positive tone. I shall not talk today about the details of the control orders referred to in Lord Carlile's report; we will have a chance to debate them when the renewal order is in place. I should re-emphasise the Government's view that, as the right hon. Gentleman said, proper judicial process—going through courts, and for convictions—is the right way to address these matters wherever possible, rather than using measures such as control orders. He is also right to say that under the legislation currently before Parliament, the number of cases in which there is a prospect of securing a conviction through the courts will increase; I hope that it will have the impact that he describes. For the avoidance of doubt, I should confirm our approach throughout this process: we are introducing a regime that will apply only to a very narrow set of cases—we hope that it will become narrower—in which prosecution through the courts in the normal way cannot work.
	The right hon. Gentleman asked how we will deal with deportation cases in the light of court judgments. I am not going to predict how we will deal with such situations, but we have been able to secure memorandums of understanding with a number of countries, and the Foreign Secretary and I continue actively to discuss with other countries the securing of such memorandums. I hope that the courts will regard those memorandums as serious agreements between sovereign Governments in such circumstances. But of course, the courts will have to judge the nature of the memorandum of understanding with a particular country, and its operation in relation to a particular case. Therefore, I am not going to speculate about how that will be dealt with.
	On intercept, the right hon. Member for Haltemprice and Howden is right to say that hon. Members in his party and others, and many Labour Members, have wanted to explore whether we can do better than is currently the case. I can confirm what I have told him in private, which is that the Government are looking at that very actively and seriously, with a view to seeing how we can introduce an appropriate regime. A report on that will be produced later in the year. If progress is made in that regard, I can confirm that legislative change along the lines suggested by Lord Carlile would be appropriate.
	Whether his remarks amount to a gentle comment or a rebuke, the very cordial and consensual relations that I have had with the right hon. Member for Haltemprice and Howden in discussing some of these matters have not always been evident in debates in the House. I blame my own conduct for that, of course, but he may care to look at his own approach in that regard. [Laughter.] However, I do appreciate his determination to play a constructive role in rationalising the legislation. As he says, it could certainly do with pruning and close examination. In that context, we would need to see whether the current legislation on terrorism in Northern Ireland could be brought within the framework. I repeat that I very much appreciate his constructive approach.
	We are not looking for a blank cheque from the Opposition or any other Member of the House. We will not simply lay a proposal on the Table and say, "Take it or leave it." We want a serious debate and a consensual approach to achieving a stable and permanent legislative regime that will tackle properly the appalling challenges that we face.

Alistair Carmichael: May I also thank the Home Secretary for his very generous advance notice of the statement and of Lord Carlile's report? That has been of considerable assistance. I should also like to associate myself with his remarks about the composition of Lord Carlile's report. He has brought to it his customary intellectual rigour and a very sound practical approach to issues that can be complex and involved.
	In respect of control orders, Lord Carlile concludes:
	"In practical terms control orders have been an effective protection for national security."
	That is significant, but he also observes:
	"They fall not very far short of house arrest, and certainly inhibit normal life considerably",
	and
	"As a last resort (only), in my view, the control order system as operated currently in its non-derogating form is a justifiable and proportional safety valve for the proper protection of civil society."
	In light of that, what action will the Home Secretary take in relation to what Lord Carlile says about the use of deportation detention, as outlined in paragraphs 27 and 28? He states:
	"However, I have a real concern about the detention under deportation procedures (even where bail has been granted) of persons who in practice cannot be deported at present and are unlikely to be capable of legally compliant deportation within a reasonable time."
	That sounds like something dangerously close to an abuse of process.
	Will the Home Secretary also ensure that Lord Carlile's conclusions in respect of letters issued by chief constables will be acted on? He observes:
	"Little is given by way of reasons"
	when chief constables certify that there is
	"no realistic prospect of prosecution."
	Finally, will the Home Secretary act on Lord Carlile's recommendation that there should be established
	"a Home Office led procedure whereby officials and representatives of the control authorities meet regularly to monitor each case, with a view to advising on a continuing basis as to the necessity of the obligations imposed on each controlee"?
	I welcome the Home Secretary's announcement about a new Bill that I hope will receive some pre-legislative scrutiny. I have told him already in private that I consider that to be a sensible way to proceed, although I hope that it will be possible to look again at the indicative timetable that he has proposed, as that would not allow anything to reach the statute book inside two years. Will he assure the House that the new Bill will not be used as an excuse for revisiting matters on which hon. Members have already expressed a very clear view?
	Finally, I share the Home Secretary's frustration at the lack of consensus on these matters. It is clearly preferable to proceed with consensus, if that is at all possible. I fear that the fault is shared by all parties, and I hope that he will ensure that his words are heard in No. 10 Downing street.

Charles Clarke: I thank the hon. Gentleman for his approach and the stance that he has adopted. As I said in my statement, in principle I accept each of Lord Carlile's recommendations to which he referred—on Home Office procedures, deportation processes and so on. I am required—and wish—to consult with the Intelligence Services Commission and the director general of the security service, but I hope that not too many weeks pass before we debate the renewal order. I shall then set out to the House my detailed and final decision, following that consultation, on Lord Carlile's recommendations.
	I very much welcome the constructive approach adopted by the hon. Member for Orkney and Shetland (Mr. Carmichael) in respect of the timetable for the new Bill. I can tell the House that his predecessor in the post took the same approach. I shall look at what the hon. Gentleman said about the indicative timetable, but I am determined that the new Bill takes full account of all the pieces of work to which I referred. The timetable will therefore not be based on indolence on the part of Parliament or the House, but on the fact that proper account must be taken of how the regime has worked, the comments that are made about it, and other specific pieces of work that must be developed.
	The hon. Member for Orkney and Shetland mentioned revisiting issues. Parliament has a tradition of doing that in a variety of ways. I cannot guarantee that no issues will be revisited, by me or another Labour Member. I am not sure that I can ask him for a guarantee that his party will not revisit any issues—I am thinking about its opposition to the existence of control orders in the first place—but a commitment in that regard from him could very much aid consensual progress.

Brian Jenkins: My right hon. Friend said that he would consult the ISC and the director general of the security services. I know that these are difficult matters, but will he ask them also to prepare a report for Members of Parliament that could be placed in the Library? In addition, will he ask them to push the envelope in respect of the information that any such report can contain? In these circumstances, the more information that hon. Members have the better, especially when it comes from an independent and neutral source, although I recognise the difficulties that our security services encounter in making such information available.

Andrew MacKay: While warmly welcoming the Home Secretary formally letting the House know today that work is being carried out on a legal model that we hope will allow for tapped evidence to be permissible in court, may I underline that for many of us it is absolutely essential that we fall into line with our European allies and that this actually happens? We fully understand that it might take some time to find this legal model, but it must happen and it must be incorporated in the fresh legislation. I hope that it is a matter of when, not if.

Charles Clarke: First, I am grateful to my hon. Friend for his general support. Secondly, I can certainly give him the assurance that he seeks. The reason why—it was in response to the debate in this House—we have given Lord Carlile this commission is precisely to inform the debate that we will have. We are expecting him to report towards the end of this year. These are difficult questions. Perhaps I should remind the House that the United Nations Security Council decided last year to pass a resolution on this matter, including—dare I say it—the use of the word "glorification" as a matter that should be outlawed. That was according to the august body of world opinion, the UN, and not just some No. 10 Downing street occupant of the moment. One of the mandates from that Security Council resolution was that during this year the convention on terrorism should be developed and a new agreed international definition of terrorism achieved. I discussed that with the UN Secretary-General. There is serious work going on in this area and there are serious difficulties. I am not sanguine about the possibility of getting such an agreement, but obviously I would want us to take account of whatever happens in the UN context. I can happily and confidently give my hon. Friend the assurance that he seeks.

Charles Clarke: I was using the word "consolidation" in a broad sense and perhaps too loosely in my statement. I can confirm that my intention is in accordance with what the hon. Gentleman is saying, that is to look at the situation in the round and get a clear position on the statute book. I cannot agree with his attacks on the European convention on human rights and the Human Rights Act 1998. That has been an important development in many ways. Neither can I accept that the role of the judiciary somehow stands against the protection of the public. The rule of law in this country is dependent on the independence of the judiciary and how it operates in deciding how to protect individual liberties. That being so, there are serious issues about the interpretation of the ECHR and some of the court judgments. We have asked for certain issues to be reconsidered by the court, for example the Chahal judgment in relation to these matters. We have joined various other actions in those regards. I am not saying that there is nothing in what the hon. Gentleman is saying, but it would be a grave mistake to set the judiciary as the opponent to the protection of the public because that is not true. It would be a grave mistake, too, to say that human rights should not be at the core of our approach. As the hon. Gentleman rightly says, the balancing issues are complicated and difficult and that is precisely what Parliament will have to assess when we look at the legislation.

Jim Cunningham: I echo what my hon. Friend the Member for Tamworth (Mr. Jenkins) said: what would really reassure the public if and when the new legislation goes through Parliament would be if we could have some sort of annual report on that. The public would then be reassured that Parliament has taken an interest. Finally, what happened to the proposal in the press report to tap Members' telephones? Does my right hon. Friend agree that there is a question of confidentiality between the public and their Member of Parliament?

Charles Clarke: I entirely agree with my hon. Friend's comments. His point about terrorist or freedom fighter is exactly the issue that the UN is addressing, and it is why some of our hon. Friends pressed the need for a new look at the definition of terrorism in the debates on the legislation last year. It is a difficult problem, because the question for freedom fighters is how their fight for freedom is undertaken and who is brought into the firing line. I accept my hon. Friend's point and it needs to be part of the process.
	On my hon. Friend's first point, he is a far more experienced parliamentarian than I, but I regret to say that it is not simply a question of what has happened in the other place. In this House, we have seen some sharp exchanges in some debates. I never make political comments about the Lib Dems or the Conservatives—I eschew that pleasure—but I hear what my hon. Friend says and there is much substance to it. All parties would do themselves credit in front of the public if they took the issues seriously, addressed them directly and could not be accused of political point scoring.

Adam Ingram: I do not recognise the premise of the question. We are seeking to not to privatise but to drive through very significant efficiencies. We have said repeatedly from the Dispatch Box that we are committed to achieving £2.8 billion, or thereabouts, in efficiencies over the next three years. We must therefore consider how we deliver our services—sometimes in partnership with industry and, sometimes, in-house, but at all times trying to maximise the efficiency of operation.
	My hon. Friend the Member for North-West Leicestershire (David Taylor) mentions collocation. If he is arguing that we should keep two departments separate from each other, when we can make significant efficiencies in back-office staff by collocating, thereby releasing money for the front line, I could not disagree more.

Adam Ingram: We must ensure that all those who support the front line do their jobs as efficiently and effectively as they can. By driving through that agenda, we are ensuring—this is where I shall come to the procurement aspect, Mr. Deputy Speaker—we will be able to sustain the major procurement programme.
	I hear language that is part of a major campaign, but I suggest that my hon. Friend may want to ask one or two of the unions that are organising the campaign whether they have ever passed a resolution at their conferences calling for more money for defence—I suspect not—and if they want a growing defence base, they should join those of us who think that that is essential.

David Wright: My right hon. Friend will be aware that staff at Sapphire House in Telford do an excellent procurement job. They have made a constructive alternative proposal to collocation, known as the Strawman paper. Will he commit himself to taking another detailed look at that proposal before he makes any decision about the future of Sapphire House?

Adam Ingram: My hon. Friend has been very active in respect of that and other decisions that might be deemed difficult that have landed on his area of the country and his constituency in particular. He will know that I am only too willing to meet the trade unions and local representatives, as well as him, to listen to the arguments and to put what we are doing under test. One of the projects that I inherited is a very good example, although people seem to have forgotten about it. The airfield support project was an amalgamation of a new, bigger review with what was originally defined as "Fire Study 2000". We spent a long time examining our airfield support. Ultimately, when it became clear that the private finance initiative proposal would not produce results, we abandoned that approach.
	I give that example to show that, at all times, we put such things under intense scrutiny. My hon. Friend the Member for North-West Leicestershire mentioned the intelligent customer in the original question. We must test all our current projects by determining whether we would create a gap or a potential problem for ourselves in the future. If we cannot satisfy that test, we should not proceed. We undertake that examination at all times.
	I think that the Strawman paper has been withdrawn, but I will write to my hon. Friend the Member for Telford (David Wright), who has been very assiduous in pursuing the issue.

Adam Ingram: I ask the hon. Gentleman to calm down a bit. Knowing that a work stream is being undertaken that could result in the collocation of two major headquarters, we have considered whether we can benefit by procuring at this stage in the market. We have made the decision to take up that office space. Of course, if the collocation does not proceed, we will release that space back to the market. If we wait or do otherwise, the office space to meet our needs might not be available. The correct management and ministerial decision was taken to give us the opportunity of ensuring that we are in the best position. If that proves not to be the right decision, our judgment is that we will not suffer a loss. Indeed, we might well make a profit, but that is not what drives us. We are trying to get the best balance. We have not reached a conclusion on the consultation—far from it—and we hold rigidly to that position.
	I suggest that the hon. Gentleman read the paper on which he campaigned at the last election—the James report—with all its initiatives to dispose of real estate, other assets and many of the existing working structures, without any attempt even to examine the territory. It simply said, "Let's privatise this; let's dispose of that; let's get rid of this." He campaigned on that in the last election; he is now asking me to be very careful with his constituency, saying "Do it to others, not to me." That is the principle that he applies.
	I want to make some progress and to talk about the defence industrial strategy. The rationale for publishing the DIS is clear. Since the strategic defence review was undertaken, the environment has changed considerably. This nation no longer faces the dangerous but relatively predictable threat posed during the cold war. The threat now, however, is no less dangerous: those involved can strike at any time and they fight unconventionally.
	The way in which our armed forces have taken on the new challenge presented by the war on global terrorism is a testament to their proven adaptability and flexibility. Equally, we must ensure that the equipment capability requirements of the armed forces can be met now and in the future. We need to identify the core skills and industrial capabilities that are required onshore to sustain the armed forces' ability to operate with an appropriate level of sovereignty—indeed, we have done so with the DIS.
	The DIS provides industry with the certainty to plan ahead and invest for the long term. We want to attract skilled and enthusiastic people to the industry. As a result, we intend to work with the industry on how we do that and on schemes to develop our people. The DIS involves a studied assessment of each individual industrial sector. Where our requirements have been set, they are measured against our procurement activity, and where there are mismatches they are set against the sustainment work required.
	In certain sectors, industry has to move now, to ensure that the industrial base is appropriately structured for the future. Now is the right time to do that, while many of our companies are busy delivering the series of new platforms that the Government are procuring. Whatever the rate of new production, we need to ensure that the technologies that give our equipment its cutting edge, which are often provided by smaller enterprises in the supply chain, are nurtured and developed.
	The discipline of systems engineering will continue to be vital in seamlessly integrating new technology to our current infrastructure. The outcome of all that will be that, for the first time, industry will have a much clearer idea of our priorities, enabling both industry and investors to plan for the future in confidence.
	At present, we are in the middle of a substantial investment programme in new equipment for the armed forces: not least, with the components of carrier strike, the CVF—carrier vessel future—and the joint combat aircraft, Astute attack submarines, the A400M transport aircraft, Typhoon and complex weapons, such as Storm Shadow, and forecast spending of more than £2 billion pounds a year over the next decade on our drive towards network enabled capability.
	Yesterday, HMS Daring, the first-in-class of our Type 45 destroyer fleet, was launched. I regret that I was unable to attend, but my right hon. Friend the Secretary of State for Defence was there and it was a fantastic experience, not just for those who had helped to plan and build the ship, but for the tens of thousands of people in Glasgow who watched that unique dynamic launch. It was inspiring and it sends the right message to taxpayers about what they are getting for their money.
	Daring's launch was a great advertisement for the skills and commitment of the thousands of people involved in the programme. It will be the most powerful destroyer that the UK has ever built and all those involved in the programme can be extremely proud of what has been achieved. Daring's on-board living standards, which have generated much positive press interest, also help to demonstrate the priority that we are giving to improving the quality of life of members of our armed forces. The equipment will take the armed forces into the 21st century with the kit that is needed to meet a varied and dangerous threat with certainty.

Adam Ingram: It does not raise concerns, but shows that we need to think about what we are doing, which is the whole purpose of the defence industrial strategy. My hon. Friend has got it wrong. The company to which he refers is already the monopoly prime supplier and the design authority. It has now moved its people on to the main operating bases so that they can work alongside RAF personnel with greater synergy so that we can turn round the aircraft as effectively as possible. Importantly, we retain the key skills of the design authority company so that we ensure that we have the capacity to maintain the through-life of aircraft.
	My hon. Friend and I have tussled over this time and time again. I have no doubt in my mind about the validity of the decision that has been taken because it was based on evidence, whether for fast jet or helicopter support systems. We have not taken a one-size-fits-all approach. In one case we have gone on to a main operating base, but in the case of Defence Aviation Repair Agency Fleetlands, we have moved towards a civilian base on which military personnel work. We must balance the best way in which we can get value for money for the taxpayer and, more importantly, the way in which we can get the best guarantee that the greatest number of aircraft is available at any one time. The evidence already shows that that is happening.

Adam Ingram: I will move on, if the hon. Gentleman does not mind.
	I want to turn to the maritime sector. We are undertaking the largest naval shipbuilding programme for two generations. Both the Astute submarine and Type 45 destroyer programmes are in their manufacturing phase and we announced details last year of the industrial alliance to take forward the future carrier programme, which will deliver a step change in the power projection capability of our forces. The two new future carriers will be the two biggest warships ever to be built in the United Kingdom, and the associated work could sustain and create some 10,000 jobs across the UK during its design and manufacture period. We also announced last week our intention to work with the French Government on the demonstration phase of that project. That makes clear sense, as it allows both countries to benefit from savings on shared procurements without slowing the tempo of the project. France, as we know, will make a financial contribution to share in the investment that we have made. We have significant investment planned to develop the Royal Fleet Auxiliary as part of the military afloat reach and sustainability—MARS—programme.
	New warship platforms such as HMS Daring are important, but we must be able to support them as part of our overall capability to deploy worldwide. MARS vessels will make a significant contribution to providing sea-based support for amphibious, land and air forces. While that shipbuilding capacity gives us an opportunity to invest in important skills and capabilities, there will be reduced demand in future. We therefore need to plan now with industry to ensure that the right capabilities are invested in, developed and sustained in times of reduced capacity. The maritime industry is fragmented, with high overheads and a skills base that is spread across too many different companies. The DIS analysis has challenged our previous policy, which required all warship hulls to be built onshore, the rationale being to better manage a consistent "drum beat" of shipbuilding for industry to sustain critical capabilities.
	The analysis focused on what those capabilities actually are. In that context, "hulls" is too simplistic a term. We need to sustain high-end skills to design and integrate complex warships and maintain them through-life. We need to retain, too, the ability to design, manufacture and support all aspects of submarine capability. We will develop that work with industry through a maritime industrial strategy team. Our priority is to develop a stable and healthy programme to build complex warships—the "drum beat" to which I referred earlier. It should maintain the critical capabilities, whatever the capacity of industry.
	Regarding submarines, we are working to control cost growth and to identify opportunities for rationalisation in the various onshore monopolies. Submarines are a core capability for retention, but the industry is made up of a series of monopoly suppliers. With only one customer, the need to control costs in the supply chain is paramount. We are addressing that by developing a consistent work load for the sector to help industry to sustain capability and drive down costs. We are looking at new ways of doing business for surface ship support, where a longer-term relationship with industry is more likely to safeguard capabilities at value for the taxpayer. The result of that strategy will provide workers with the security to develop their skills in long-term structured and secure employment.
	Turning to land systems, the armoured fighting vehicle industry provides our land forces with significant military capability. We are currently developing our plans to deliver the complex system that will make up a new family of medium-weight vehicles known as the future rapid effect system—FRES. At the same time, we need to plan ahead for the support arrangements of our existing fleet of some 5,000 vehicles, which will remain in-service for some years. That is why we announced alongside the DIS last year our plans to partner BAE Systems, which supplies 95 per cent. of our existing AFV fleet, to better manage fleet support.

Adam Ingram: I should like to make some progress, and I have already given way to the hon. Gentleman.
	The partnering arrangement signals our long-term commitment to industry in this sector. It envisages a different way of doing business, as BAE Systems will be contracted to provide AFV capability when and where we need it. It provides for retained access to innovative subsystems and technologies in the supply chain. That will require effort on both sides, but the benefit is mutual, as it safeguards critical capability and at the same time achieves better value for money.
	Turning to the aerospace industry, it is an exciting time for that industry, with the development of two highly capable aircraft—Typhoon and the joint combat aircraft. Looking further ahead, we will develop potentially transformational uninhabited combat aerial vehicle—UCAV—technology.

Tobias Ellwood: The Minister has glossed over one of the most important aspects of the procurement debate, which we should discuss—the F35. Has he had any discussions with Henry Hyde, the Congressman—[Laughter.] Hon. Gentlemen may laugh, but it is a serious matter—the chairman who is in charge of organising the relationship between Britain and America? We are close to losing the deal, which means we will have two aircraft carriers without any aeroplanes on them, unless we get a deal giving us the technology to repair and maintain those aircraft.

Adam Ingram: In a sense, that view is shared across the House. The hon. Gentleman asked whether I had met Congressman Hyde. I have not. Last time I went through Washington he was not available, but I met other key players. Meetings such as the hon. Gentleman suggests are the role of the Minister for Defence Procurement and of my right hon. Friend the Secretary of State. All hon. Members who pass through Washington should be briefed on the issue and should raise it. If they do not, they are not doing this country justice. We must make clear to our American friends and allies the importance of the issue, and we continue to do so. We are making some progress, and I will comment on it later.

Adam Ingram: That is an important aircraft, which is taking a long time to arrive. That is the reason for the C17s. Given that the A400M will be leading edge and will have very good technologies on board, it will be able to do a great deal of strategic airlift and strategic activity, which will make it a forerunner in its field. That is why we are excited about the project and waiting for it to be delivered. I hope to be at the Dispatch Box when that happens.

Gavin Strang: The House is grateful to my right hon. Friend for what he has said. The issue is hugely important, as he understands, and a decision will have to be taken. Is not this the year that it will have to be taken? Either we go down the road which I assume is still the Government's preferred option—my right hon. Friend might describe it as plan A—the JSF, using the big new carriers, or we recognise that it must be the Eurofighter tranche 3, navalised, as plan A.

Adam Ingram: I have taken a substantial number of questions on that topic, and there are others that I want to address.
	Within the complex weapons sector we have invested considerably over the past decade in new programmes such as StormShadow and Brimstone. These weapons provide the armed forces with the ability to deliver precise effects, which are able to achieve military advantage at a reduced level of usage. Our analysis has consequently highlighted a series of vital capabilities for retention in this field, with particular emphasis on the design of new weapons and upgrades, integrating them into the wider military network and support through life. But we need to be realistic. Our recent investment cannot continue, and on current assumptions will decrease by 40 per cent. over the next five years, creating overcapacity and a need for rationalisation.
	We will work with all elements of the onshore industry, including overseas companies that have established a UK presence in the sector, on how best to tackle that. This may require us to temper international competition in the short term and to consider whether there are solutions that we might develop with our allies to maintain critical skills. We intend to work on the necessary solutions this year and to implement them in 2007. That will not be easy, but it is essential that we do so in this critical field.
	We also need to ensure that our armed forces can have continued and long-term assured access to less complex munitions, while maintaining the option to go for the best in the wider global market, where security considerations permit. Currently 80 per cent. of our existing munitions requirements are met by BAE Systems via an agreement that commits us to find ways to more effectively provide munitions across the supply base. At present we are engaged with the company to enhance this agreement through a new long-term planning agreement. This will mean changes, but we are confident that we can ensure security of supply.
	I make it clear that we will continue to operate the most open defence market in the world, encouraging others to follow our example. As an example of this, we have recently developed with the European Defence Agency a code of conduct regarding the procurement of warlike goods. We expect this to lead to a more open European defence equipment market, giving UK industry a greater chance to win business abroad.
	The UK industry has also been successful in developing its presence in the sizeable US market and is a major contributor of equipment to the American Department of Defense. UK defence sales to the US have increased by about £500 million to a total of nearly £1.5 billion over the past five years. Over the same period, there has been a corresponding increase in the UK's share of total US defence investment spending from about 1.5 per cent. to 2 per cent.. The UK accounts for about 50 per cent. of total US defence procurement spending overseas.
	Despite our close industrial, political and military ties, however, we continue to experience difficulties in securing the necessary technology transfer from the US to guarantee our sovereign operational independence. Such technology transfer is vital if we are to continue to co-operate with the US on major equipment programmes. As the hon. Member for Bournemouth, East (Mr. Ellwood) suggested in his question, this is an important issue for us and one which we continue to raise at the very highest levels.

Adam Ingram: I wish that I had not given way now; that is another debate in itself. It may be better if I write to the hon. Gentleman on that. The whole concept of DIS is looking forwards to the new technologies—what is coming along, what is important, what we need, how we define the need, whether there is a key capability and core skill base within this country that we want to preserve, and that also matches our need, and how we deliver all that. I will write to the hon. Gentleman on the specific questions that he raises.
	Our success will be largely dependent on the changes that industry will also need to make, to plan better for the long-term, growing system engineering capability, stimulating innovation across the supply chain and developing the right behaviours. It is ultimately how industry responds to the challenge, and how we demonstrate the DIS in our future investment decisions, that will demonstrate the strategy's success.
	The change programme is a top priority for the Department and the Government. The defence industry will likewise need to move quickly to put both the MOD and industry in the best possible position to achieve the aims of the DIS. We are determined to achieve this and to deliver the armed forces the equipment that they need for the demands of today and tomorrow. Our people deserve nothing less.

Gerald Howarth: I first associate the official Opposition with the remarks made by the Minister and the condolences that he has expressed on the deaths of the two servicemen, Lance Corporal Allan Douglas and Corporal Gordon Pritchard, the most recent casualties in Iraq, and a salutary reminder to all of us and to the nation of the proud part that is played not only by our armed forces but by their families in supporting them. I join him in paying tribute to the families who give this unstinting support, as I know, representing as I do a garrison town. The Minister is entirely right to remind the House and the nation that around the country there are many injured servicemen and women who did not lose their lives, but who every day will bear the scars of the contribution and the sacrifice that they have made on behalf of us all. The House will be grateful to the Minister for that.
	The fact that so many right hon. and hon. Members on both sides of the House wish to participate in the debate is an indication of the importance of defence procurement at the present time. Furthermore, the fact that the Minister's contribution lasted for virtually an hour—although, if I may say so, it was a bit wayward at the beginning—was an indication that he too regards this as an important issue, and that there are a number of very specific factors that we need to address. I am conscious that my right hon. and hon. Friends wish to contribute, and if I miss out something, it is not because I do not regard it as important, but I wish to preserve some time for my colleagues, and no doubt my omissions will be taken up by them.
	I almost begin where the Minister left off, because he referred to the various reports that have been published recently, not least the NAO's major project reports. Since we last debated defence procurement 15 months ago in November 2004, there have been a number of those reports, so this debate is against the backdrop of a series of Select Committee and NAO reports highly critical of the Government's management of defence procurement. Once again, Ministers have presented a strategy designed to meet our procurement requirements for the coming decades and to make up for the deficiencies that the previous strategy failed to resolve.
	The 2005 NAO major project report was greeted by the MOD as an improvement on the previous two years, which was hardly difficult given that the 2003 report was described as the worst in the history of the report. As is now customary under the Government, the report still highlighted significant cost overruns and delays, and the MOD's latest projects are now £2.7 billion above the originally approved costs. But that specifically excludes—I understand on grounds of commercial sensitivity—the Typhoon project, which in previous years had accounted for over £2.3 billion in cost overruns. The MOD's major procurement projects also continue to fall behind, with delays increasing by 45 months over the past year. But once again, that figure is affected by the exclusion of the joint combat aircraft, which has had its in-service date mysteriously dropped.
	In a rather underhand attempt to pre-empt the third disappointing major project report in a row, the noble Lord Drayson held a press briefing days before the embargoed report came out, to spin the positive points in that report. The Minister claimed a £699 million improvement in the cost of the 20 largest defence projects. However, as the NAO concluded, those savings came not from efficiency, but from cuts to future capabilities and cuts in the number of platforms.
	Let us not forget that the 2005 report follows hard on the 2004 MPR, which cited cost overruns of £1.9 billion and delays of 144 months. That report followed the disastrous 2003 report that I have just mentioned and its £3.1 billion cost overruns and an average delay of 18 months across the 20 largest projects.

Gerald Howarth: The Minister has got a bit of a nerve referring to events of eight years ago. The Government have been in office for eight years, and first they introduced smart procurement, then smart acquisition. There has been new idea after new idea to try to deal with the problem, but the Government have failed, and the NAO reports indicate that. I am sorry to say to the Minister that I will not give way again if he simply tries to blame the last Conservative Government eight years ago. The public are fed up with that. The Government are in charge. They are responsible and accountable, and what is more, we will hold them to account until the day comes, very shortly, when we take over.
	It is not just a matter of the NAO reports. The Defence Committee, chaired so ably by my right hon. Friend and neighbour the Member for North-East Hampshire (Mr. Arbuthnot), Labour members of which are present, has been equally critical, charging in its 2004 report that
	"Our Armed Forces have been let down by the organisation tasked with equipping them".
	That is hardly a tribute to the Minister. More recently, the Committee in its report on two of the MOD's largest and most important projects, the carriers and the joint combat aircraft, concluded that it may be "falling seriously behind schedule" and thereby creating a potentially dangerous capability gap for the Royal Navy. The Committee has also warned that if costs are not brought under control, the project may become "unaffordable". The members of the cross-party Committee are knowledgeable, and they have criticised the Government's performance. After more than eight years in power, the Government have failed to deliver promised improvements on the delivery of equipment to our armed forces. The cost of major projects has continued to rise, and in-service dates have continued to slip—there is no money left in the budget, so allowing programmes to slip is the only way in which to manage the position. Over the past year, the MOD's unfunded commitments rose by £5 billion to almost £19.5 billion.

Gerald Howarth: I have not seen Sir Peter's remarks, and I shall read them with great care. Sir Peter is in charge now; the delays are occurring now; and the in-service dates are slipping now. It is no good blaming the Government of eight years ago for something for which this Government have taken responsibility for the past eight years. Sir Peter has been in office for the past two or three years, so he should be careful when it comes to casting beams out of other's eyes.
	Since the Government came to power, spending on defence has fallen both in real terms and as a share of GDP. Defence spending in 2004–05 was almost £1 billion less in real terms than in 1995–96. In 1995–96, defence expenditure was 3 per cent. of GDP, but this year it is set to fall to 2.3 per cent. of GDP. However, our military commitments are far greater today than was envisaged even in the strategic defence review, and they are expected to remain at the current high tempo.
	The Minister has mentioned the defence industrial strategy, which is an attempt to identify the key military-industrial capabilities that we need to retain in the United Kingdom. The document is a move in the right direction, not least because the Government have taken on board what we have been saying for the past three years. In the procurement debate 15 months ago, I called for
	"a mature partnership with industry, with both sides working together from a project's inception through to the completion of its service life."—[Official Report, 4 November 2004; Vol. 426, c. 488.]
	We welcome the Government's conversion to our view.
	If we are to retain certain key capabilities in the UK, it will involve placing some non-competitive contracts. However, we must be wary, because the cost-plus approach has failed to deliver value for the taxpayer in the past. When the MOD seeks a particular solution through a non-competitive contract, we propose that the MOD and its industrial partners should run an open-book accounting system policed by the National Audit Office to ensure value for money for taxpayers. I have discussed the matter with the Comptroller and Auditor General, Sir John Bourn, who confirmed that the NAO could assist in such a scheme. I have mentioned that idea in the past and offer it as a genuine and constructive suggestion to the Minister as a means by which we can retain key industrial capabilities in the UK, where we have only one supplier. I am offering the Minister a mechanism by which we could try to protect the taxpayer interest and retain that defence industrial capability.
	The defence industrial strategy will be judged on how it works in practice. The hon. Member for Tamworth (Mr. Jenkins), who is not in his place, described it as a "MOD wish list" in Defence Committee on Tuesday, and he was largely right. Furthermore, some serious unanswered questions have been left hanging, and I shall raise a couple of them. On fixed-wing aircraft, the Government appear to accept our strategy of maintaining Britain's aerospace industry by involving it throughout an aircraft's service life. I have always believed that we should provide an income stream to industry to ensure the certainty of which the Minister has spoken. However, the bald statement that current plans do not envisage the UK needing to design and build a future generation of manned fast jet aircraft beyond Typhoon and the joint strike fighter effectively heralds the end of a century of capability in which the United Kingdom has been a world leader.
	Given the uncertainty surrounding the joint combat aircraft programme, I question whether abandoning the ability to make combat aircraft would be foolhardy in the short term and echo the infamous Duncan Sandys 1955 White Paper, which confidently predicted the end of manned flight. I accept that the era of the unmanned air vehicle and the unmanned combat air vehicle has dawned. The United Kingdom must be fully involved in the development of that technology, and I understand that it is. However, it is not in our national interest so lightly to abandon the capability of building manned fast-jet combat aircraft.
	The Minister has referred to "complex weapons"—missiles. The strategy states:
	"Complex weapons provide our armed forces with battle winning precision effects".
	In other words, missiles are critical to modern military operations—the soft speak is for the benefit of groups such as the Campaign Against Arms Trade, which does not like some of our manufacturing industry's products. A few lines later, however, the document states:
	"There is, apart from the Meteor programme, little significant design and development work beyond the next two years. This will present a substantial challenge to the industry."
	The Minister has discussed that point, but what about the challenge to Government? If missile technology is vital, we must establish the means to ensure that we have access to secure supplies. I note that the Minister has said that negotiations are under way, and I hope that he will keep the House informed, because if the DIS statement is right that those weapons are critical to modern warfare, then we must retain that capability in the United Kingdom.
	That brings me to the fundamental issue that underpins the DIS. As the Minister has said, the Government accept that
	"to maintain our national security and keep the sovereign ability to use our armed forces in the way we choose we need to retain those key capabilities in the UK."
	The force of that argument cannot be understated. Let us not forget that during the first Gulf war the Belgians refused even to sell us ammunition.
	On ammunition, the DIS states:
	"it is essential we retain onshore the design authority role and its underpinning capability for munitions manufacture",
	but the Government accepted the closure of the BAE facility at Bridgwater, which means that the source of supply will be overseas. In answer to my questions, Ministers tell the House that they are content to rely on BAE for security of supply, knowing that that supply comes from overseas. BAE cannot give that guarantee, because it will be subject to the whim of the overseas manufacturer's Government. The Minister is not entitled to accept a guarantee from BAE.

Gerald Howarth: If the hon. Gentleman will forgive me, I want to press on with a few other important issues, one of which is defence research.
	The report says that there is
	"a strong correlation between equipment capability and R&T investment in the last 5–30 years."
	That means that the battle-winning capabilities that we have seen in Iraq and Afghanistan in recent years are the result of investment in defence research in previous decades—principally under Conservative Governments, I should like to remind the Minister. It is quite simple. If we want to be able to continue to play a global role and to give our armed forces the best equipment available into the future, we have to invest in research today. At the last election we called for an increase in the proportion of the MOD budget available for R and D. In the DIS, the Ministry appears to share our fears about the danger arising from a failure to make that investment, for it states that
	"in the coming decades the UK could fall behind both our key allies and emerging economies in our ability to support sophisticated and competitive technology-based industries."
	That strikes at the heart of the defence industrial strategy. By their own admission the Government are failing our armed forces. Government spending on defence research has fallen from £840 million in 1997 to about £450 million today. If the Government are to deliver on the DIS they need to commit proper funding for defence research.
	I asked the Secretary of State what proportion of the sales receipts from the Qinetiq flotation will be made available for defence research. The answer that I received from him earlier this week said that a substantial proportion of the receipts would be retained by the MOD, but just what does substantial mean? Does it mean that the MOD will retain a majority of the funds? If the Minister cannot put a figure on it until after the sale, perhaps he can give us details of what percentage of the funds he estimates will go to the Treasury and what percentage will be retained by the MOD. Even more importantly, how much of this windfall will be reinvested in R and D, not just swallowed up in the overall defence budget? I hope that the Minister will be able to answer those questions when he winds up.
	That brings me to the questions surrounding the sale of Qinetiq. The Government stand accused of selling off a major British national asset far too cheaply. That has been confirmed by the admission of the Minister's former colleague, who used to sit next to him—Lord Moonie, the Minister responsible for the sale of one third of Qinetiq to Carlyle—that he opposed the timing of the sale. We made our concerns clear at the time of the sale that Qinetiq had been sold off too cheaply and that the sale could have been delayed until market conditions had improved. In January 2003, in the Defence Committee, I asked, "Can you explain to us laymen why Carlyle is paying £42 million for a one third stake in a company with a value capital net of debt of £312 million?" The value of the physical assets alone suggests that it was seriously undervalued at the time. It is now clear that the sale was not motivated by a desire on the part of the MOD to enhance defence research but by the Treasury in a crude move to screw more money out of the MOD to help to plug the Chancellor's black hole.
	There remain unanswered questions over the future of Qinetiq. We need to know precisely how the relationship between the company and the MOD will operate following the flotation, not least in respect of urgent operational requirements for military operations. We also need assurances that intellectual property generated in the UK will remain in the UK and not be siphoned off to the United States or elsewhere. As Qinetiq moves much of its focus to the United States, what consideration has the Ministry given to the possibility of intellectual property transfer to the US then becoming subject to the stringent US export controls mentioned by my hon. Friend the Member for Bournemouth, East (Mr. Ellwood)? What safeguards has the MOD put in place to prevent asset-stripping?
	Are Ministers comfortable that they have engineered an incentive scheme correctly given that a few employees of the company stand to make small fortunes that make lottery winners look like village paupers? I have to confess that some of them are very good friends of mine—[Interruption.] Well, I am looking forward to a very large dinner from Sir John Chisholm, and I have already told him so. [Interruption.] I hope that it will be so good that it is required to be entered in the Register of Members' Interests, and I have made that clear to him as well. However, there is public unease. That points to Ministers' failure to have undertaken a proper assessment of the value of the state asset that they were selling.

Bob Russell: I am interested by the hon. Gentleman's dismay that a public asset is being flogged off at a knock-down price, as I thought that that was the whole object of all the privatisations that we had historically.
	On a specific point, does the hon. Gentleman's criticism of the Government about the lack of research and development include military clothing and textile?

Gerald Howarth: I know of the hon. Gentleman's interest in textile issues, which is shared by other hon. Members. Those of us who are a bit more familiar with the armed forces than others understand the importance of good-quality kit, in clothing terms, to our armed forces, particularly those out in the field. When I went up to Arbroath with the armed forces parliamentary scheme, we visited 43 Commando. I was told by one of my more subtle hon. Friends, who shall remain nameless, that if I banged on about the kit, I would get my head banged. When I arrived, 43 Commando, who are some of the toughest guys in the business, had the kit laid out on the floor. They showed us the trousers that were split and the boots that did not work. Clothing is important.
	Returning to Qinetiq, it is now clear that that privatisation has been carried out on a timetable designed to suit the Treasury rather than to enhance Britain's defence research base. The DIS is clearly good news for the prime contractors, not least BAE Systems, which has its headquarters in my constituency, but unfortunately it gives little consideration to small and medium-sized enterprises, whose concerns will need to be addressed. The key is implementation; we will need to see how it is going to work in practice. The strategic defence review was an impressive document, but its implementation has been hindered through lack of proper funding. We will therefore wait to see whether the DIS is to be funded properly.
	Let me turn briefly to some individual projects. On carriers, Lord Drayson's admission to the Defence Committee last year that the MOD was no longer able to commit to bringing the first new carrier into service in 2012 has come as a bitter blow to the Royal Navy. In November 2004, when he appeared before the Defence Committee, the First Sea Lord stated in no uncertain terms:
	"I am still adamant that I want it in 2012".
	That was just 15 months ago. This project has been needlessly delayed. We need assurances that the new assessment phase, which was announced just before Christmas, will be completed within the year. HMS Invincible, already in mothballs, will be withdrawn from the fleet in 2010; HMS Illustrious is to be decommissioned in 2012; and HMS Ark Royal is to be decommissioned in 2015. We need to know what progress is being made on the extension of service of the ships referred to in the statement that the Secretary of State made before Christmas. Have any costings yet emerged from that process?
	The House and the Royal Navy need to be kept closely informed regarding the exact nature of French involvement in this programme. We know that they are going to buy into the design. It is imperative that their involvement should not be allowed to delay construction of the UK's two carriers. Has agreement been reached with France over the charge for the design plans—we understand that it has now been confirmed at £100 million—and is their involvement in the direction of the project more extensive than simply buying the plans?

Gavin Strang: I am grateful for the opportunity to speak in this debate.
	As an Edinburgh Member of Parliament, I want to put on record the fact that it is a matter of great regret on both sides of the House that the Member of Parliament for Dunfermline and West Fife is no longer with us. I am grateful for the nodding from the Opposition Front Bench. As we know, she developed a great interest in defence matters as a result of the constituency she represented, not least because of the Rosyth dockyard. She specialised in the subject, took part in the graduate, post-graduate and later stages of the armed forces parliamentary scheme and eventually got on to the Select Committee on Defence, although I know that she would have liked to get on to it earlier. Members of that Committee on both sides of the House will confirm that she was a real specialist on defence and made a tremendous contribution on behalf of the British people.
	I want to move straight on to the procurement issue, which is hugely important. I congratulate the Government on their defence industrial strategy. It was important that they published it last December, and I also congratulate the Secretary of State on his statement. The strategy was a step forward in many important respects. Perhaps it did not establish a framework—that is too strong a word—but it was a statement to use for the future. Certain issues are not addressed in the document, while others are perhaps addressed in a way that we would not like. It is important, however, that we have such a substantial document on the defence industrial strategy, which points up some of the key issues that have been discussed, not least that of the United States, on which, given the current situation, the hon. Member for Aldershot (Mr. Howarth) rightly spent some time.
	It is vital that we protect and nourish our defence industrial base. We cannot produce everything, which I think is what the hon. Member for Aldershot meant when he referred to muddling through, although I do not like the word "muddle". We must recognise that we cannot develop expertise in every aspect, particularly of the forward and expensive technologies. We do, however, have something remarkable in this country. In the context of our manufacturing industry, the British aerospace industry is still tremendously successful, but it is at a potential turning-point. If we do not sustain and support that industry, an important part of which is military, we will probably look back in 10 years' time and regret that we did not make the key decisions to help to maintain that industry and all the jobs that depend on it.
	Time is limited, and I want to move on quickly to the Eurofighter, to which Members on both sides of the House have no doubt heard me refer in the past. I have been concerned about the issue, and I accept fully that my interest is partly due to the importance of the jewel in Britain's industrial crown, as Arnold Weinstock called it—the skills that we have in relation to radar, lasers and so on, predominantly but not just in Edinburgh, in part of what is now called SELEX.
	It is tremendous that the Eurofighter is performing so well. Air force people in America and the other three countries involved, Germany, Spain and Italy, speak highly of the plane. Those of our pilots who have been up in it cannot speak too highly of it. We have got tranche 1 and 2, and we are grateful to the Government for sustaining that programme. Perhaps we would have liked the tranche 2 announcement a bit earlier, but we will not make an issue of that today—it is behind us. The issue, of course is, tranche 3.
	I do not want to inject a partisan note, but the hon. Member for Berwickshire, Roxburgh and Selkirk (Mr. Moore) will be aware of concern, to put it mildly, about his party's policy. I am not sure if it has changed its policy, but it emerged before the last general election that the Liberals were committing themselves to no tranche 3 for Eurofighter. If there has since been a change in that policy, I should be pleased to be informed about it. No doubt the hon. Gentleman will say something on the subject. I hope he will say that a tranche 3 may well be needed, because there may well be a need for a Eurofighter that is different from the tranche 2 version, which has ground attack capability but could be improved. We have to think about the future position of the Eurofighter, and also that of the joint strike fighter. I do not know what plan B is, but it will almost certainly have to involve a role for a Eurofighter. A Typhoon could operate from the big new aircraft carriers, but it would need to have short take-off and vertical landing capability.
	If the Government can achieve what we want from the JSF, that is fine. We can make progress. A waiver in respect of the US International Traffic in Arms Regulations will be necessary, and it is not in the gift of the United States Administration or the President. We must get Congress to recognise that we need it, and give us it. There has already been a huge setback, in that we were promised it five years ago and have not been given it so far. We must face up to the position, and I think that we should think in terms of a decision this year.
	SELEX has made a huge contribution to development of the Typhoon, and with its lasers and sensors Edinburgh has won the head-to-head competition for the JSF contract in the United States. That was a tremendous achievement and we welcome it, but we need the technology transfer. We want to ensure that SELEX in Edinburgh can generate the profits that will pay for research and development. We need Government help if we are to maintain our cutting edge in technology. We cannot possibly sustain it if we have to enter into an arrangement whereby, in future, all the traffic is one way. The United States can go it alone, because its R and D expenditure is so colossal and its market is so large. We need that waiver. The position is complex, but it was promised to the United Kingdom and, I believe, to Australia five years ago.
	In a sense, I have no problem with the strategy. It recognises that BAE Systems is a British champion, although most of the equity is now owned in the United States. It sold a number of its Edinburgh assets to Finmeccanica, and it called the new company SELEX. We have Finmeccanica and we have Thales: two very big players in the British defence market. We must bear in mind what we do not want to happen to Finmeccanica, or to SELEX in Edinburgh, in the long term. The Minister rightly spoke of the importance of the upgrading, servicing and maintaining of the planes, which have huge long-term prospects. We should consider how long the Tornado has been operating, and the amount of money that has been generated by its maintenance and upgrading. The same applies to the Eurofighter. The SELEX people in Edinburgh have the expertise and equipment, and if they are the best at making the avionics for such planes they will obviously be the best for maintenance, development and upgrade purposes. We do not want BAE Systems—the British champion—to think that in the long term, it can come back in or squeeze us out. The reality is that Finmeccanica, along with other companies, is there, and the British Government took a very important strategic decision in allowing it to buy those assets.
	We have reached a very important stage in the future of our industry. There is no doubt that we have great strength in avionics and in aerospace generally. I hope that we will not allow the situation to drift. Crucial decisions have to be taken, and if plan B has to become plan A—as it may well have to do—we will probably need to take them within the next 12 months. Reference has been made to a memorandum of understanding being agreed between the two countries' officials. A memorandum of understanding does not sound that strong to me. We will need to examine the situation as it develops, but it is not looking good at the moment. I hope that we can make progress in our talks with the US and find a way to achieve effective and meaningful collaboration and a transfer of technology, so that my constituents can keep their jobs, continue to provide superb equipment—such technology is the best in the world—supply the US market, and help to build the JSF in this country on terms that are mutually acceptable to the US and the UK.

Michael Moore: I begin by echoing the tribute that the right hon. Member for Edinburgh, East (Dr. Strang) paid to the late Rachel Squire, who is sadly missed in all parts of the House not simply because she was an acknowledged defence expert and someone whom the House listened to on the subject, but because she worked unfailingly on a range of activities on her constituents' behalf for many years. She is sadly missed indeed.
	I echo the tributes that both Front-Bench spokesmen paid to the bravery of our armed forces, and I repeat the condolences expressed to the families of those who recently lost their lives. I endorse the observations made about the care of, and needs of, those who have fought on this country's behalf and been seriously injured. We owe them a great duty of care.
	This is an extremely important debate for many different reasons. Defence procurement remains one of the largest areas of Government spending, and we are at a crucial moment in the development of some major projects. Tributes have already been paid to the fact that the Typhoon is now in service, and I hope to deal with that issue and with some of the observations made by the right hon. Member for Edinburgh, East. Yesterday saw the launch of HMS Daring at Glasgow's Scotstoun shipyard. Unlike some other Members, I was unable to be present. The closest I got was a very impressive website broadcast, which showed much of what was going on. But whether one was there or one saw it in virtual reality, it is a fantastic achievement and a great sign of the manner in which we are gearing up our capability.
	As others have said, we have entered a very important phase in the development of the next generation of armoured fighting vehicles. We hope that some indication of the decisions taken on carriers, and on the replacement of the nuclear deterrent, will be given sooner, rather than later, but the most important issue in the context of this debate is the defence industrial strategy, which was published just before Christmas. It has been introduced at an extremely challenging time for our armed forces and the industries that support them. In every debate on these matters, the House acknowledges the new world security environment and the huge demands placed on our armed forces, to whom we consistently and properly pay tribute. The changes and challenges facing the country and our service personnel have a major impact on the defence industry, which also faces its own challenges as globalisation and financial pressures keep shareholders and management teams focused.
	Certain key principles need to be remembered in the debate. The requirements of national security are paramount, and we must ensure that our armed forces have the most appropriate equipment and support so that they can do all that we ask of them. In addition, that equipment and support must be supplied on time and at best value for money for the taxpayer. Recent experience in Iraq showed the perils of mistakes in the latter respect, and the hon. Member for Aldershot (Mr. Howarth) has already gone into detail about how NAO reports have regularly documented longer-term failings in procurement.
	The defence industrial strategy is ambitious, and is clearly an attempt to tackle some of the legacies of certain projects and the process of defence procurement. Symbolically, it has got off to a good start, being delivered on time and to a demanding time scale, and it has been well received by industry and many commentators. We support the principle of identifying the key industrial capabilities necessary to underpin national security, and recognise that the transformation of the industrial base is a consequence of that approach. However, we also acknowledge that serious issues will be thrown up as a result. Some questions remain unresolved in the strategy paper, and we hope that we can return to the subject as more detail is fleshed out in the course of the year.
	I shall focus on some of the key themes in the strategy document, and national sovereignty may be one of the most fundamental principles at stake. There is already significant use of non-British suppliers, and there will be more in the future. Even nominally British suppliers are increasingly global and answer to shareholders and stakeholders beyond these shores.
	The UK is at the heart of the north Atlantic and European industries. That is an ideal position that should be exploited, and we therefore join others in welcoming the recent EU code of conduct on defence procurement. We hope that it will help in many of the ways already identified by the hon. Member for Aldershot.
	National sovereignty will arise as an issue on many occasions but, as has already been noted in the debate, the most pressing context at the moment is the joint combat aircraft. Quite properly, the Government have made robust public statements about the need for access to the intellectual property underpinning the JAC, and that approach has been repeated today.
	Britain is a senior partner in the project, so we must have the capability to service and upgrade the planes throughout their lifetimes. Budgetary pressures in the US, and that country's quadrennial defence review, may be squeezing the options just now, but they cannot override that fundamental principle. The Government's determination and the apparent intransigence of the Americans mean that it is important that all parties in this House unite in support of Government efforts to sort out the problem. However, we need assurances that credible alternatives are being planned, as the right hon. Member for North-East Hampshire (Mr. Arbuthnot), the Chairman of the Defence Committee, suggested in an intervention. Moreover, the Americans must appreciate that those alternatives will be implemented if we cannot resolve the present difficulties satisfactorily.
	The Defence Committee has already highlighted the dangers of a capability gap if the JCA were not available to us on the right terms. That would be a massive blow to the defence strategy, and to this country's ability to deliver its defence objectives.
	Cost and value for money are also real issues on this programme and across all other procurement projects. The new strategy is a serious attempt to tackle the well- documented problems. It seems more focused on key capabilities, and transformation of the industrial base is welcome and substantially changes the equation on value for money considerations. Sustaining capability in key sectors will mean consolidation and a reduction in competition, as set out in the defence industrial strategy. In BAE Systems we have clearly created what used to be known, not always flatteringly, as a national champion. It has welcomed the strategy and the clarity that it brings. Coupled with the series of recent announcements about carriers and armoured fighting vehicles it can begin to see how the strategy makes sense for the company. As a world class company of vital importance in both industrial and defence terms, that is a welcome reaction.
	Surely, though, the key to these new arrangements, specifically the partnering arrangements, will be their transparency and openness. There has not always been the easiest of relationships between the Ministry of Defence and BAE, so no doubt both sides will welcome the intent to achieve greater transparency and openness in their dealings. For taxpayers it is vital that the MOD has the access it needs to BAE to ensure value for money. Parliament, too, must have confidence that at the very least our key Committees, whether on defence or public accounts, backed up by the National Audit Office will share in that new openness and transparency. Of course, somewhere in the background the Treasury will have something to say.
	In all these dealings we have to take account of commercial confidentiality. That will become an increasingly important issue where competition is not a driver in the market, so who determines what is commercially confident will be crucial. We must make sure that we have some independent mechanism for scrutinising projects when they go under that heading. We have already seen, in relation to Typhoon, the cloak of confidentiality coming down over the latest cost performance on the project and the arrangement to sell aircraft to the Saudis. We all understand the realities, but we must have confidence that people independent of the main parties involved in the contracts can scrutinise and pass judgment on what is now a fundamental starting point for the new strategy. There is talk of demanding partnered relationships in the document, and we must hope that that will prove to be true.
	The transformation of industry's relationship with Government is only one aspect of the new strategy. A key driver is to shift from a focus on the creation of platforms to one on systems. The complexity of network-enabled capability was demonstrated by the launch of HMS Daring yesterday, which was a helpful illustration. If the carriers go ahead, they will take this to a whole new level. For the next decade there will be good times on the Clyde, the Forth and in many other places. The principle of creating one national shipbuilder may be the inevitable outcome of procurement demands, but as yet there is not much detail to go on. Like others, we want to see that fleshed out. What scale of consolidation is envisaged in creating the new ShipCo and what diversification is anticipated for areas where the next decade may be a feast, but beyond which may be a famine, is not yet clear and we would appreciate understanding how the Government's thinking is developing on that.
	The switch to greater emphasis on systems and their integration offers great challenges and opportunities to British industry, as does the welcome shift to looking at through-life costs, rather than the initial substantial outlay on ships and aircraft. Similarly, stressing the importance of lifetime capability management—a phrase the Minister used earlier—through ongoing support and upgrades is absolutely crucial if many of the mistakes and cost overruns of the past are to be avoided. In that respect, the comments made by the right hon. Member for Edinburgh, East (Dr. Strang) about the skills in Edinburgh are very important for Typhoon.
	We must hope that whatever industrial structure that emerges, it will give plenty of scope for ongoing innovation, much of which comes, in this country, from small and medium-sized enterprises, which need to be encouraged and not put off by the consolidation that goes on around them. SMEs have an important role to play in strategy, which is one of the areas where the biggest concerns have been expressed. Further work is promised on the technology priorities, but as the flotation of Qinetiq is under way, it is a strange omission from the strategy. We must hope that the further work that is spelt out will be completed quickly and we will have a further opportunity to consider it.
	When we debated defence in the UK back in November, I raised with the Minister the flotation of Qinetiq. I stressed that we supported it as an excellent company with world class achievements and that we did not oppose the privatisation. However, it is fair to say that the manner of the privatisation has raised some serious issues. I appreciate that the Minister wrote to me after that debate, although much of what he could say was constrained by the inevitable secrecy ahead of the flotation.
	We still do not have very many answers on the original part sell-off to Carlyle, not least regarding the tax arrangements and the controls on asset-stripping. We also need further details about the relationship with the most important customer—the Ministry of Defence—and about who may be allowed to own the company in future.
	We welcome the decision of the National Audit Office to investigate the sale. The website makes it clear that it will be a wide-ranging investigation, covering everything from the choice of privatisation strategy to whether the deal is likely to meet its requirements. The flotation goes to the heart of the debate on the key principles of national security and value for money for the taxpayer, and we will examine the NAO's report very carefully when it is published.
	Other hon. Members have pointed out that the NAO has its work cut out keeping track of the current procurement programme. Many of the main problems have already been aired and I will not repeat them, but I echo the dismay about past performance and lack of progress on key developments such as the carriers. I hope that at some point we will get some clarification about Typhoon and some more insight into the arrangements that have been made to sell some to the Saudis.
	The right hon. Member for Edinburgh, East said that during the election we made it clear that we did not support the development of the project to tranche 3. We took that decision at the time, based on the information that was available to us and the uncertainty about the future development of other options. That seemed sensible to us, given the way in which the joint combat aircraft was developing. The Minister said today that doubt remains about the next tranche and about the joint combat aircraft. We want to watch those developments carefully and it is incumbent on all of us to reconsider our position if the realities change around us.

Michael Moore: I apologise if I gave the wrong figure earlier, but, as I said to the right hon. Member for Edinburgh, East (Dr. Strang), we must keep a close eye on phase 3, especially as the joint strike fighter programme seems to be in difficulty. Clearly, if the JSF were ruled out, Typhoon is the most obvious alternative, notwithstanding the serious technical issues that would need to be overcome.

David Crausby: I add my congratulations to all those concerned with the launch of the Type 45 destroyer on the Clyde yesterday. It marked an important milestone on the march to a new type of warfare involving the introduction of a series of complicated weapons that will integrate land, sea and air in a way previously not envisaged. The vessel will be a credit to the defence manufacturers, engineers, those who serve in her and the Government for having the foresight and the courage to fund such excellent warships. Once again, it gives the lie to those who say that Labour Governments are not committed to Britain's defence.
	This is an exciting beginning to an era of procurement that will completely modernise the British armed forces. Coupled with the publication of the defence industrial strategy, we are presented with an opportunity to deliver an impressive and profitable future for our defence industrial base. There is of course much to do to ensure the effective implementation of the defence industrial strategy, especially further down the supply chain, because small and medium enterprises will guarantee our future. We must ensure that the policy does not merely protect our major contractors.
	The document should be welcomed as a helpful start, although I am disappointed that the decision to close the Royal Ordnance factories at Bridgwater and Chorley was made before the White Paper. Being wholly dependent on foreign suppliers for the manufacture of our military explosives appears inadvisable, to say the least, but I am sure that my hon. Friend the Member for Chorley (Mr. Hoyle) will have more to say about that if he has an opportunity to contribute to the debate.
	Research and technology are critical to the future of our defence industrial base. I very much look forward to the development of the MOD's future research and technology strategy, because we are undoubtedly in danger of failing significantly behind the Americans if we are not prepared to make greater efforts in that field of expertise. It is vital that we retain the technology independence that has served us so well through the generations.
	With many of our European partners keen to retain a state interest in their defence industrial bases and the Americans increasingly obsessed with the buy American campaign, we should watch our backs. The decision taken by the Americans to deny the UK the international traffic in arms regulations waiver is, quite frankly, an absolute disgrace. It is an indication of how protective and, indeed, selfish our Atlantic allies are when defending their own living standards.
	The US House of Representatives Committee on International Relations warned in 2004 that exempting Britain from the international traffic in arms control regulations would increase the risk of sophisticated weapons, perhaps indirectly, being passed to terrorists or unfriendly nations. We are entitled to be offended by those remarks, because this country, with the support of the Government and the major Opposition party, has stuck its neck out in support of American foreign policy further than many of us believe that we should have done.
	ITAR is obviously dead. It may well be that it is not all that important—that is what we are now told, although it was important not too long ago—but we should be appalled by the Americans' decision to distrust us in such a way when dealing with technology transfer. If all that we receive in return for our efforts in supporting George Bush and his regime is condemnation from the rest of the world, topped up with distrust from the Americans, we will simply be driven to think very carefully about our commitments in the future.
	Of course the acid test will be the joint strike fighter, because even though I completely accept that the purchase of the JSF from the Americans represents extremely good value for money, it will be of little use if we are unable to utilise it effectively and to upgrade it, as and when we choose, without having to call on American industry every time that we want to develop something—not to mention the interference of American politicians. We must have access to the software and systems used on the JSF if we are to operate in a network-centric way, if we choose to defend ourselves without the Americans.
	The United States must understand that, if Britain is only able to utilise the weapons that we pay for to their full potential with American permission and agreement, we may as well just leave them to do it themselves, thus saving money and the lives of British soldiers on the way.
	I strongly suspect—I am optimistic—that we will persevere with the JSF, largely because we are so committed to the project, not least given the design of our new aircraft carriers, but we have been betrayed by the denial of ITAR, and we must learn some lessons from the behaviour of the US Congress. Of course questions about the availability of the short take-off and vertical landing version must be asked and answered urgently, because the impact on the design and cost of our future aircraft carriers, which are the cornerstone of our plans, will be crucial. Most importantly, we must apply the lessons learned from that sorry episode to the transfer of technology and independence when we decide to replace our nuclear deterrent. I urge the Government to ensure that we have a full and extensive debate on the replacement of our Vanguard submarines and Trident missiles.
	I have no doubt that in a world on the edge of major nuclear weapons proliferation, we have no alternative but to retain a British independent nuclear deterrent. While India and Pakistan have a deterrent, with Israel and North Korea almost certainly in possession of one, Iran desperately wanting one, and Taiwan, Saudi Arabia, South Korea, Egypt and other countries waiting in the wings, we have little choice but to retain our nuclear defensive position. We find ourselves within 15 years of the end of the 25-year hull life of the first submarine, HMS Vanguard, although I understand and accept that its service life has been extended to 2024–25. The detail of its replacement clearly must be up for debate. We must decide not only whether to replace it, but the purpose and shape of our future delivery system.
	Given the limited size of Britain's nuclear stockpile, it makes obvious sense to use submarine delivery because air or ground-launched missiles cannot possibly offer us the same security as a submarine. I am encouraged by the determination expressed in the defence industrial strategy to maintain key capabilities in the UK, but I urge an early published resolution to what we intend to replace the Vanguard class with, alongside firm decisions on the acquisition of the proposed Astute class nuclear-powered submarines so that we can ensure, most importantly, that we retain necessary skills and design capabilities onshore.
	The defence industrial strategy is a fine start to what will be an exciting period in our defence history. However, we must ensure that we miss no opportunities to pass the benefits right down the food chain and defend our ability to protect independently our own security.

Dai Havard: I shall keep my remarks short, as those on the Front Benches have again taken up over half the time available for the debate.
	On efficiency, with the amount available for defence expenditure, the problem is how we spend it. As I told the Minister last night, I envisage him going to the Treasury and saying to the Chancellor, "Gordon, I'd like some more money", and Gordon saying, "Well, when you can spend what I give you properly, come back and ask for some more." That has been the problem right through the term not only of the present Government, but of all Governments. It is a huge problem. In that sense, a defence industrial strategy to develop and deploy the industrial policy that the Government have had for some time is a good idea, and I welcome it because it helps to address exactly that problem and has made strides in doing so. However, the role of Government agencies is important, and the Select Committee Chairman referred to the Defence Procurement Agency. That has been a dysfunctional organisation in many respects for some period of time; it has not had the necessary emphasis in terms of process. The strategy places pressure on that organisation to reform itself so that it becomes an appropriate vehicle within the overall strategy. That is long overdue, but if it happens it will be a good thing. I will welcome it and we will try to help the process work.
	My right hon. Friend the Minister talked about support for fast jets and the Committee's recent report on the matter. He said that the reason for doing what was done was to retain design skills within BAE Systems, but that was not the only reason. That was not the argument that was made at the time for that change taking place. There was also talk of the need for skills to be retained within the RAF being a reason for the change. I am sceptical about that, but we will doubtless address the matter at another time and in another place.
	The question of the C-17s is important. I visited 16th Air Assault Brigade last week, and it is going to Afghanistan. It will test in anger—I hope not too much in anger, but certainly test in practice—the Apache helicopters. It will also test air manoeuvre and support ground manoeuvre. To do all those things, it needs lift, and that is a constant problem. The C-17s have been supremely helpful in dealing with that over a period of time. They did not go through the classic acquisition processes of the time, but they have proved to have been very necessary and very successful, and we could do with a couple more because they are plugging gaps in the process.
	In order to carry out manoeuvre capability, support is necessary. There has been a lot of talk about big toys, fast jets and carriers, but to give that manoeuvre capability to people on the ground requires a strategy. To do all this we will have to collaborate in different ways and there will be different types of collaborators, both industrial and political. The strategy looks at particular types of equipment that are needed in relation to particular sectors of industry. There is an imbalance in the provision within the UK. Wales does not really get sufficient defence expenditure. Hon. Members may disagree, but that is the truth. At the moment south Wales is experiencing difficulties with fast jets. However, we also see opportunities, such as those in the defence training review.
	I want to use this opportunity, not to plead that everything should end up in south Wales—although that would probably be a good idea—but to make a point that goes to the heart of something that was said earlier on, and that concerns transparency in process. When deciding where that project should go, transparency is the key, as it is to a number of other matters.

Michael Jack: As I shall say about the joint combat aircraft, the hon. Gentleman's observation is true, if we retain the ability to alter the basic structure. In fairness, the DIS states that the unmanned air vehicle scenario is another way of keeping those technologies alive. At the moment, we have an advantage, because we have some of the most modern equipment in the pipeline, but what will happen if the technical advantage degrades over time? There is an awful lot of money in this world, and we have heard that a lot of states could afford to acquire nuclear weapons. Furthermore, Russia has the ability to build advanced fighter aircraft, which it could supply to others.
	I do not know what will happen in the next 30 years. I just want to make certain that my concept of technological deterrence is maintained at a high level to put off other people, and that if we do have to return to building a fast jet, we truly have the capability to do so.
	I want to explore a little further the present situation as regards the Eurofighter Typhoon. The defence industrial strategy is silent as regards the third tranche of that aircraft. I guess that a discussion must be going on in the Ministry of Defence about how many of these aircraft we will want to have an operational capability at any one time, because that will determine the number of aircraft that we are going to buy. If we wanted, say, 40 aircraft, we could do away with tranche 3; if we wanted 80, we would have to keep it. Can the Minister enlighten us on how the thinking is going on that?
	I congratulate all those involved in winning the order from Saudi Arabia for up to 72 Eurofighter Typhoons; that is welcome. However, this is a Government-to-Government arrangement, and at a certain moment in time the aircraft that are going from the second tranche to fulfil the order for the first 24 will be technically owned by the UK Government. Can the Minister therefore assure me that we are not about to be subjected to an example of smoke and mirrors whereby the Government magically acquire 72 of these aircraft, which is more or less tranche 3, sell them to Saudi Arabia, and then put their hands up and say, "Right, we've bought 232 of these, we've done what we said", when in fact they have not answered the question of the RAF's actual requirement. We need clarity on that.
	The defence industrial strategy is also silent on the successor to Hawk. The Government are buying the advanced jet trainer, and I am glad about that. However, at some stage in the next decade there may be a world demand for a successor, and the DIS says nothing on that subject.
	The hon. Member for Bolton, North-East (Mr. Crausby) said everything that needs to be said on the joint combat aircraft. He said it with passion and elegance and I agree with him. However, I draw the House's attention to paragraph A2.12 of the strategy, which says:
	"We welcome the progress made in establishing understandings on Security of Supply (the US/UK Declaration of Principles and the Letter of Intent Framework Agreement)."
	We all welcome it, but the Minister did not give us a clear and detailed explanation of exactly where he thinks that Ministers stand in a Government-to-Government sense. I hope that he will be able to comment on that in more detail. Paragraph B4.42 of the strategy says, in reference to the joint combat aircraft,
	"As part of this performance based arrangement, the UK also intends to establish sovereign support capabilities which would provide, inter alia, in-country facilities to maintain, repair and upgrade the UK fleet and an integrated Pilot and Maintenance Training Centre."
	None of that will happen unless the points made by the hon. Member for Bolton, North-East are fully addressed.
	Another part of the latter paragraph deals with the question of whether it is necessary for the United Kingdom, in addition to maintaining and upgrading the aircraft—which is essential for the reasons given by the hon. Member for Vale of Glamorgan (John Smith)—to have a final assembly and checkout unit. I think that it is necessary in order to maintain our skills base. More importantly, as the Minister will know, the success of Case White, the method by which the Eurofighter Typhoons were initially inducted into RAF service, with the RAF squadron based at BAE Warton, demonstrates that a final assembly and checkout unit is a prerequisite of the good introduction into service of this vital aircraft.
	On a slightly discordant note, it is disappointing that while we are arguing about BAE's further involvement in this project, we have silently seen the exit, apart from parts of the STOVL—short take-off and vertical landing—version of the aircraft, of Rolls-Royce as a second engine supplier. If there was any communication—I gather that there was—between our Prime Minister and President Bush, it seems to have been one way. Again, I agree with the hon. Member for Bolton, North-East. It is vital that we say to our American counterparts, "If you really think that partnership means something, you have to come to the party and trust your closest ally with these technologies." There is no point in having the aircraft in service if one cannot look after it, and the best way to understand it is to make it.
	I want to consider some of the inconsistencies in the strategy that appear under the heading, "Sustainment strategy". Although I appreciate that the strategy is designed to sustain and maintain our capabilities, one or two paragraphs require further explanation. Paragraph B4.39 states:
	"Our need to retain a minimum level of onshore capability does not necessarily mean that we will need to support all aspects of our aircraft in the UK."
	What do the Government mean by that? On the one hand, they want to sustain companies such as BAE Systems, but on the other, they appear to suggest that, if they get a good offer for doing some of the sustaining, maintenance and upgrade work from somewhere else, they might accept it. One cannot have one's cake and eat it if one wants an up-to-date military aircraft industry in this country that maintains its capabilities.
	Paragraph B4.40 states:
	"For any particular aircraft type there may also be a middle ground where, to secure value for money for example, we may rely on off-shore suppliers for major upgrade".
	Does that mean that the Eurofighter could go to Italy for upgrading? I should be grateful if the Minister could enlighten us further.
	Paragraph B4.41 states:
	"However, major changes must be made in the management and operation of the supply chain to incentivise continued improvements in the support arrangements for this aircraft, ensuring that we retain onshore our ability".
	On the one hand, the document specifies "offshore", and on the other, "onshore". The Government must be clearer, especially given their comments on the joint combat aircraft.
	Paragraph A1.21 states:
	"We must maintain the appropriate degree of sovereignty over industrial skills, capacities, capabilities and technology to ensure operational independence against the range of operations that we wish to be able to conduct."
	That is vital, especially in the light of the Minister's comments at the beginning of the debate that operational scenarios occur in which we need to act quickly. Unless we have 100 per cent. capability, we cannot fulfil that requirement.
	There are further inconsistencies. Paragraph B4.23, which covers aerospace systems and enabling skills and technologies, states:
	"Whilst the UK will have an enduring need for access to world leading technology across the range of aerospace systems, it is neither practical nor affordable to retain all the relevant skills and technologies onshore."
	It continues by referring to the underpinning skills and what the Government want to achieve.
	When considering key ingredients in the systems that we currently operate—described as "mission systems"—the strategy states:
	"There is a strong UK based capability in the Mission Systems area, which has enabled the UK to deploy world-class capability without undue dependence on other nations".
	The paragraph concludes:
	"However, this capability is now threatened by an intermittent flow of new programmes."
	Again, one cannot have one's cake and eat it. The capabilities must be maintained.
	I am worried that the time scale of up to 10 or 15 years for further developments of unmanned air vehicles is too long. The use of autonomous air vehicles will be a vital part of future strategy and I hope that the Under-Secretary can tell hon. Members that the time scale will be shortened. I congratulate BAE Systems on its investment in the prototypes and on its achievements.
	When will the decision on Nimrod be made? Is it likely that 12 aircraft will be organised? I welcome the strategy but I hope that the Under-Secretary will acknowledge that we cannot simply pick and choose or have our cake and eat it. We must invest in the best of British technology.

John Smith: I welcome this opportunity to speak in this very important debate. I should like to start by congratulating the Government on the publication of the defence industrial strategy. It was published on time, and due credit has already been paid to the noble Lord Drayson for the role that he played in that. We have had an excellent debate so far on the implications of the strategy, and I want to focus on one important area.
	I believe that the strategy represents a welcome dose of realism. The British defence market is one of the most open markets in the world. We have had a policy of opening our markets for more than a decade, and that is quite right. Unfortunately, our major competitor countries have not reciprocated. The French Government control their key assets and dominate their market through state-owned, nationalised companies, or through national companies in which the Government have a golden share and a direct state interest. They also retain the traditional arsenals, and control all the armaments and ammunitions through Government Departments; they are not even companies. France has a traditional, state-regulated system.
	The United States, on the other hand, claims to have an open and competitive system—indeed, it has federal laws that demand competition. The problem is that that competition is limited to taking place between domestic suppliers. As we know from bitter experience, it is incredibly difficult to break into that market other than through acquisition, as BAE Systems succeeded in doing.
	The defence industrial strategy seems to offer an alternative route. However, I am not convinced that the strategy will deliver what we need. Gaps have already been referred to, and I shall not repeat those points other than to lay down the marker that there is no coverage in the document of the role of small and medium-sized companies. There is also very little coverage of second-tier competition in the supply chain. It is clear that we are going to move further and further towards longer-term partnering agreements, but what role will the smaller companies play in the line of supply to the prime contractors? The danger is that they will move out of the industry as there is nothing in it for them, and they will take their innovation and enterprise with them. I do not think that that problem has been addressed. We wait with interest to see what the Government's position is on research and development, because that subject is also missing from the defence industrial strategy.
	My concern is to compare the strategy, for which we have waited for more than three years, with the original remit of the defence industrial policy. There has been a clear shift in Government thinking in that regard. We have met the challenge in regard to recognising strategic capabilities and defending them, just as the French and the Americans and just about everyone else have done. That is important because we need those capabilities for economic reasons and for defence reasons.
	More importantly, through this document we have told the industry what our expectations are to be over the next 20 to 30 years, which gives it the opportunity to restructure. In answer to the question, "Who will do the restructuring?", the industry will have to do it to meet the challenges presented by the change in the market that is clearly declared in the document. Those are good things.
	My concern is that, in the original document, emphasis was placed on obtaining long-term value for money, encouraging competition wherever possible, and avoiding the creation of monopolies. Those objectives are in the policy—read it. I am not sure that this strategy will achieve those objectives. The policy states that we will require
	"More transparency and inclusiveness within the procurement decision making process",
	and that we demand
	"open and fair competition".
	Some of the partnership arrangements will last up to 25 years with a single company, and there is a danger that we will not be able to meet those criteria.
	Clearly, the strategy contains a shift away from encouraging competition wherever possible, but I happen to think that such competition is good for our defence industries, rather than dependence on a small number of prime companies. I know that this might be unpopular in the Chamber, but I feel that I should relay my fear to the rest of the House about the danger of encouraging one sole monopoly supplier. That is the inherent risk in the strategy. It could be argued that the defence industrial strategy was written by BAE Systems for BAE Systems.
	I am not here to knock BAE Systems. I think that it is a great country—[Interruption] That was a natural Freudian slip. It is a great company, and we should do everything to encourage its success. Removing the pressures of commercial competition from that company, however, will not protect it. We should consider recent history and past defence procurement policies, which did not do BAE Systems any favours. My fear is that this defence industrial policy will not do it any favour either.
	Members might be surprised to hear that it is estimated that more than 50 per cent. of the MOD's large projects last year, measured by value of the contracts, went to one company—BAE Systems. It now has a sole monopoly on support for our main aircraft platforms, as I mentioned earlier in an intervention. What I mean by that is not that we have one supplier, which is not unusual in a contracted industry—it cannot be avoided—but that we have no alternative capability, which is dangerous.

John Smith: I think that the Chairman of the Defence Committee addressed one of the possible solutions—to encourage more transnational competition within the domestic market. I do not think that we should replace BAE Systems as a national champion, but we have a duty to ensure that it is an efficient, effective company that can deliver what we want to time and to price. My worry is that over a long period, we might not be able to achieve that.
	I have a little experience of running a partnership, which was very interesting and an important learning curve. We learned three main lessons. There was a lot of discussion about working together, trust and shared objectives. In our organisation, however, we drew three conclusions. First, it is virtually impossible to incentivise a sole monopoly supplier. A contractual system must be developed that keeps that supplier on its feet—competitive, hungry and able to deliver. Secondly, there is only one thing worse than a large, bureaucratic, inefficient, public monopoly—a large, bureaucratic, inefficient, private monopoly. The Government should be wary of that lesson. Thirdly, if one wants a partnership really to succeed, one must find a formula that allows the private sector to do what it does best—to compete, innovate and be efficient, without interference—and the public partners to do what they can do best, equally without interference. I feel that the proposals are too much of a fudge.
	The Conservative and Liberal Democrat Front-Bench spokesmen both referred to some of the recommendations on addressing that matter. We need more transparency—there is no doubt of that—and we need more supervision of long-term partnering contracts. BAE Systems has air support and land support—indeed, an almost complete monopoly on land systems. It is now moving into other areas. We want to stimulate competition, and if we cannot do that we want to monitor the position very carefully. We must have more transparency, and more public scrutiny.
	A major defence procurement project is on the stocks now, probably the largest defence project of all in terms of value. Someone once said to me that it was the biggest public-sector project since the pharaohs build the pyramids. We shall wait and see. I am talking about the bid for the defence training rationalisation programme. The Government must ensure that the evaluation process for the 25-year partnership is conducted robustly, fairly, openly and on a level playing field.
	We should not be asking for special favours. This is a huge project, and we want the right team to implement it. The way in which to ensure that we get the right bid is to ensure that there is proper scrutiny of the evaluation process now. There should be only one consideration in the choice of bidder: which will provide the best product for the future training needs of our military, which is the best price for the future training of our military, and which provides the best location?
	The Ministry of Defence wants a training facility that is second to none in the world and, for the first time ever, offers tri-service training—training for Army, Navy and Air Force—in an environment that can offer modern training techniques, a modern, adaptive training culture, and the flexibility to be able to change the training requirements of the three services over the next 25 years. I believe that the bid by Metrix Limited at St. Athan meets those requirements, but I am not making a special plea. I am asking the Government, when considering contracts that are so important for the future needs of our military for the best possible training, to do so robustly, fairly, openly and on a level playing field.

Robert Walter: I am not necessarily reassured by that, and would prefer to hear it from the Minister. I am not sure that it is unlawful for a development agency to be involved in bringing jobs to its area, but I know that the RDA in the south-west does not have the money to be able to match the offer.
	My real question to the Minister is as follows: can he guarantee the future of a military presence at Blandford camp, and especially of the defence college? The college is a very important part of the local infrastructure and directly or indirectly employs some 5,000 people in my constituency.
	My second key constituency point about defence procurement has to do with the future strategic tanker aircraft. The selection by AirTanker of the new Airbus A330 200 provides the best value for money and will maximise the UK's industrial potential in the project. It is a truly British solution. The Ministry of Defence has estimated the programme to be worth £13 billion, possibly over 27 rather than 25 years. It would involve the manufacture and supply of a fleet of new Airbus aircraft and their conversion to tanker configuration, the fitting and certification of military avionics, the development of Brize Norton with extensive construction work for ground and air support equipment, and the provision of long-term operational support, including crewing, training and maintenance.
	The A330 tanker has significant export potential, and its launch will have the added benefit of increasing the opportunity for UK suppliers to meet that demand. There is already talk of the French, who have a similar requirement, buying into the same configuration.
	Another question involves what the US will do, given that Boeing was knocked out in the first round of bidding for that country's requirement. I understand that the US could need as many as 300 or 400 tanker aircraft, and there is a real possibility that AirTanker could participate in that. In any event, the project will bring the maximum amount of high-value work to this country, and generate new investment and employment throughout the UK aerospace industry.
	I am particularly concerned about the "probe and drogue" aerial refuelling system that was developed and built at Wimborne in my constituency. It has been used by the RAF for a number of years, and is based on an invention by Sir Alan Cobham, who in the 1930s founded a subsidiary company called Flight Refuelling at Tarrant Rushton airfield in the heart of my constituency. He developed a system that allowed the pilot of a receiving aircraft to catch the fuel hose—the drogue—as it trailed from the refuelling aircraft. The receiving pilot could then draw the drogue in, using a type of harpoon.
	The apparatus may seem somewhat complicated by today's standards, but it was bought by the Americans after world war two. The US air force converted 100 B29 bombers to carry the system, and the planes were redesignated as KB29 tankers. Flight Refuelling has continued to develop the technology.
	Cobham's other subsidiary, FR Aviation, was formed in 1985. It operates out of Bournemouth airport, in the constituency of my neighbour and colleague, my hon. Friend the Member for Christchurch (Mr. Chope). The company is a world leader in the provision of turnkey special mission flight operations, engineering and aviation services. Between 1991 and 1996, it converted the RAF's VC10 aircraft to incorporate the air-to-air tanker refuelling role.
	I want to remind the House of the basics of the matter. Commercial-standard aircraft have been built and tested by Airbus at Toulouse, but the UK will account for half the total value of the basic aircraft. AirTanker will create a centre of excellence for the technology, build new facilities at Brize Norton and run the new systems and support operations. About 75,000 jobs in the United Kingdom are tied up with this. My question to the Minister is this: when will the Government finally seal the deal? We have been at this now for six years. AirTanker is the preferred bidder. One of the problems is technology transfer with the United States, but without it there can be no deal because the project is not viable. Unless the United States agrees to the contract specifications which the MOD has laid down, the aircraft is not a viable proposition. Can the Minister please tell me tonight when he will get his pen out and sign the deal with AirTanker?

Lindsay Hoyle: The document on the defence industrial strategy, is important to everybody. The Secretaries of State for Defence and for Trade and Industry are joint signatories because this is not just about defence; it is also about UK jobs. As the only member of the Trade and Industry Select Committee represented here today, I must make sure that that voice is heard. It is important not to neglect trade and industry.
	Rightly, much has been said about the joint strike fighter, the ITAR waiver and UK jobs. Those jobs are important to Lancashire and the aerospace technology and defence systems there. Tens of thousands of jobs rely on the contract. It seems odd to me that the Americans are happy for our troops to go shoulder to shoulder in a trench and to fight side by side, but on technology transfer they ain't playing fair, they ain't playing the game. It is unacceptable for the Americans to behave in that way and we must tell them so if they are to expect our support. We are supposed to have a special relationship. We hear a lot of words about that, but we have yet to see the proof of it. We may see the President with his jacket on walking with the Prime Minister and having a good chat at Camp David, but we want to get beyond the words of Camp David and to secure jobs in the United Kingdom.
	This is not just about having a manufacturing capability; it is about manufacturing the parts and the final assembly of the joint strike fighter. If we are placing an order for 150 aircraft, the least we can expect of the contract is to be allowed to build them here. If others, with agreement, can sell them on to a European nation, why do we not have the ability to sell them on? There are questions over maintenance, too. We may be allowed to undertake basic maintenance but there may be a technology bar preventing us from undertaking deep maintenance. We have to put right many issues as soon as possible. It is time that the Americans paid that special dividend.
	Some £2 billion of investment has already been made. What are we going to do? Do we look to the Typhoon as a variant off the carriers? That is the second part: we must not make the mistake of the 1960s when the carriers were not the right size. Carriers must provide a platform capable of taking different aircraft. We must ensure that different aircraft can operate from them. Typhoon may be the answer for the future. We cannot say yet, but we must put pressure back on the Americans.
	The future of fast jets is important for Lancashire. We must have fast jets continuing beyond the joint strike fighter and Typhoon. We must set out our technology needs for the future. We know that unmanned air vehicles will be part of that future, but I do not believe that we have given up on pilots and aircraft. Therefore, there must be investment now. We want to see the Government working with BAE Systems, ensuring that we build on the technology and skills in Lancashire and secure that advantage for the future—way beyond the 30 years that we are talking about now.
	The other procurement issue that we must not forget is NAAFI. I have told my hon. Friend the Under-Secretary before that we must not let NAAFI close. I know that we are pulling back from Germany and there is a question mark over NAAFI there, and in Cyprus and Gibraltar. The profits that NAAFI makes do not end up in shareholders' pockets, but are ploughed back into recreation for the troops. Who else would be working in Afghanistan and Iraq, ensuring that our troops have somewhere for recreation? I make a special appeal on that point.
	The other big issue is Royal Ordnance at Chorley and Bridgwater. Bridgwater produces high explosives and Chorley produces initiators and boxed caps. Nothing goes bang without Chorley. Chorley ensures that explosives work. The French, Germans and Americans would not cease production in their own countries of that vital security need, because they recognise that boxer caps and initiators have to be home-grown. BAE Systems tell us that as a favoured friend of the Government, and to ensure security and sustainability, it should retain missile technology, aerospace and shipping. However, somehow, it fails to mention explosives and the need to enter into a partnership. BAE Systems is five years into a 10-year deal—only halfway through the contract—but it wants to close Bridgwater and Chorley. It is unacceptable for us not to have a capability in the UK and it will have to reconsider its position.
	When BAE Systems bought Royal Ordnance—an unfortunate deal—it was about asset stripping. We know that the sale of the Enfield site recouped every penny that BAE Systems paid the Government for Royal Ordnance. In Chorley, it was like the wild west—it was a land grab. BAE Systems could not wait to sell off acres and acres of land—it has received the money for 600 acres. It now operates on some 180 acres of the site, producing initiators and boxer caps. It wants to close the facility, but it should not be allowed to do so. The Government will say that it is a private company, but it has a contract with the Government, so we should not allow it to close Chorley. In fact, it should be building a new facility for producing boxer caps and initiators. It should sit down and do a deal with the Government and the local authority to release a little more land—the capacity is there—the proceeds from which go to a new production facility to ensure that we have a long-term capability to fight wars.
	BAE Systems has tried short-cuts before. It supplied 21 million rounds of ammunition to the Government that has been dumped at sea because it did not work. We do not learn from the mistakes of the past, but we should learn from the Gulf war, when Belgium refused to supply us with artillery shells. This is a wake-up call for the Government: we need Chorley and we need Bridgwater. We cannot have nuclear weapons without high explosive. A charge—made by Chorley—is packed into the missile that supercharges the high explosive that generates the nuclear explosion. The charge has to be repacked regularly, so we would have no independent weapon if Chorley closed. We would be dependent on the French or the Americans and that would be absurd. We have to tell BAE Systems that it is not to close them and that a contract should be worked out that keeps both facilities open. The proposal to close is about selling the assets and ensuring as much money as possible for the shareholders, but that is not good for the future of the UK's defence.
	I know that other hon. Members wish to speak, so I shall conclude in a moment. Before I do, I want to remind the House of the bad mistake we made in giving the contract for army uniforms to China. In Chorley and Blackburn, we were producing superb uniforms, of exceptional quality, for the British Army, and then the contract was given to China.
	Well, let us ask some questions about China. It is important to find out why things went wrong. For some unknown reason, the Chinese made the battledress waterproof, yet everybody knows that uniforms must have breathability. What on earth are we doing? There have been major mistakes. Three garments were tested and there were faults in all of them. Our troops have to operate in the heat and the cold, yet somebody decided to make their uniforms waterproof. What is going on? This is the madhouse of failed economics.
	I ask the Minister: please bring the contract back from China, keep UK jobs, make sure that RO survives at Bridgwater and Chorley and let us ensure that aerospace has a long-term future.

Bob Russell: First, I express my appreciation for the troops from the Colchester garrison who are in Iraq and for those who will shortly go to Afghanistan.
	I shall follow the hon. Member for Chorley (Mr. Hoyle) by talking about clothing and textiles. We might be debating what will happen in the future, but we need to learn the lessons of the past.
	I want to concentrate on the four opening aspects of the smart acquisition life cycle suggested by the National Audit Office: concept, project initiation, assessment and project approval. In 1997, the Government inherited the relocation of the defence and clothing research establishment from Colchester to Caversfield. At the time, there were 147 staff in Colchester and the number was likely to increase to 156, but the number to be transferred to Caversfield was reduced to 84. The relocation was announced on 1 April 1999—an appropriate date, one might think—although it was more than two years before it happened. There was a year's delay while a private finance initiative was considered and a further year for a value for money investigation by McKinsey.
	Last month, I was advised in written answers that 24 members of staff from Colchester were made redundant at the time of the transfer to Caversfield and only 46 were transferred, so there was a huge reduction. Of those who transferred from Colchester in March 2001 only six remain from what was arguably the world's best clothing and textile research work force.
	I asked the Secretary of State for Defence for an independent review of the operation of the research and development facility following its transfer from Colchester to Caversfield. The Minister of State answered:
	"The future of the Clothing Research and Development facility has been under constant review . . . Independent advisors have already been involved in the review process."
	I then asked about the future of the Caversfield facility and the Minister replied:
	"The current proposal, subject to Trades Union consultation, is to close the Clothing Research and Development facility."
	He said that in future the work
	"would be competed for by industry and academia."—[Official Report, 19 January 2006; Vol. 441, c. 1531W.]
	That bears out the point made by the hon. Member for Chorley: we have lost the capacity in the UK to develop and research vital equipment for our armed forces in the field.
	When the transfer to Caversfield was proposed, I accompanied a delegation from the Colchester work force to meet the Minister to suggest a staff buy-out, but the Government rejected it.
	The Government also refused the concept of privatisation, because they said that the best way forward was to collocate everything at Caversfield. What is necessary is for the Public Accounts Committee, the Select Committee on Defence or, indeed, the NAO to look back on the proposals and compare them with the reality of events as they have unfolded.
	In 1967—some decades ahead of today's concept of tri-service proposals—the three services combined to form a purpose-built clothing and textile research establishment at Colchester. It was the most modern and best-equipped textile laboratory in Europe. The Hohenstein—I hope that I pronounced that correctly—skin model, which used to measure the passage of heat and moisture through all textiles, was the only one of its kind in the United Kingdom. That has been destroyed now. The flammability manikin used in simulations of burning clothing was one of only two in the country. That has been destroyed.
	The development of smart weapons used for camouflage, concealment and deception demands continuous effort to ensure that our service equipment remains fully capable when deployed against increasingly sophisticated technology. A fully equipped laboratory was available for that purpose. The camouflage of tanks, trucks and thermal imaging were majors areas of work—all destroyed. To develop footwear and handwear, there were environmental chambers equipped with heated hand and heated foot devices to enable the accurate measurement of the thermal efficiency of glove and boot designs. Respiratory protection equipment was available to test the quality and fit of respirators. All that has been destroyed.
	The design and development of body armour, helmet and visor materials was undertaken to protect personnel from ballistic and non-ballistic impacts. High-speed photography was used to study bullets hitting body armour. Impact testing was carried out on military helmets. All that has been destroyed.
	We know that lives were saved in Northern Ireland by the research work that was undertaken, because the flak jackets smothered the bullets. Vital research into garment design and clothing and textile development was undertaken. There was a fully equipped garment production workshop, capable of making a wide range of clothing items, with body measurement scanning booths and modern computer pattern grading equipment, but it has all been destroyed. Heavy textiles were designed for use in modern rucksacks, shelters and sleeping systems. Again, all that research has been destroyed.
	Dedicated, loyal staff, who had given years of service, were uprooted, made redundant and their jobs were lost. At least an assurance was given that the work would continue at Caversfield, but the written answers that I received last month show that it will all go. The Government had arguably the world's best textile and clothing research laboratories, but all that has gone—it is all lost—and that is a tragedy. As the hon. Member for Chorley said, it is not right to get cheap replacements from China.
	This is just a flavour of what our armed services have lost. The world's leading research facilities, originally based in Colchester, have now gone. There is no other organisation with the skilled staff available to carry out that vital and often life-saving work. I therefore hope that the PAC, the Defence Committee and the NAO will look back at what was said would happen and consider the reality of what has happened.

Linda Gilroy: I begin, as a number of other colleagues have done, by paying tribute to our former colleague, Rachel Squire. She will be particularly missed on the Select Committee on Defence. She had great personal courage. Even after traumatic surgery, she returned to the House. I remember walking to Victoria with her one very pleasant summer evening, when she was looking very positively towards the future. She would have greatly enjoyed the partnership shown in the defence industrial strategy, which, among other things, we are discussing today. I know that she was looking forward greatly to being joined by other women Members representing marine constituencies, such as my hon. Friend the Member for Portsmouth, North (Sarah McCarthy-Fry) and my neighbouring MP, my hon. Friend the Member for Plymouth, Devonport (Alison Seabeck). By this time next week, I hope that we will be joined by Catherine Stihler as the new Member for Dunfermline and West Fife.
	Defence procurement is characterised by many as being pretty dry and expensive, but to those of us with constituencies with defence interests it is important and, indeed, interesting. That is not only because many of our constituents work in the defence industry, but because, as in Plymouth, there is often a larger than average number of constituents in the armed services in areas associated with that industry. As other hon. Members have said, there is never enough money to ensure that we have sufficient personnel and equipment, and there is no other aspect of Government expenditure where value for money is more important. For those reasons, there are few cities and regions in the United Kingdom to which defence procurement is more important than it is to Plymouth and the south-west.
	That was why, as a new MP, I asked for a placement with BAE Systems during an Industry and Parliament Trust fellowship. That was one of the first portfolio fellowships, so I also spent some time with GKN, Shorts and EDS. One of the 25 days that I spent on the fellowship entailed a visit to Abbey Wood in 1999. Smart procurement was fairly new at that time. A great deal was expected of it and everyone was excited by its prospects. Five years on, there is some disappointment—to put it mildly—that we continued to experience cost and time overruns, especially in 2002–03 and 2003–04, although recent National Audit Office reports suggest that we are now travelling in the right direction. Some have queried how much of that has arisen due to cutting the quantity of programmes, including whole programmes, and the Defence Committee, the Public Accounts Committee and the National Audit Office has been critical of the situation.
	The Defence Committee, of which I am a new member, visited Abbey Wood just last week. As the Chairman of the Committee, the right hon. Member for North-East Hampshire (Mr. Arbuthnot), said, our experience suggested that newer projects might be showing real benefits. When I asked several of the staff who had been involved in a number of integrated project teams what was changing, they talked about the "toxic legacy" that had been left—my hon. Friend the Member for Portsmouth, North used that very phrase earlier. It might well be that the right direction of travel will be continued. The Chair of the Committee also said that the Defence Procurement Agency now has a better focus on recognising, as it puts it, that sometimes the best can be the enemy of the very good.
	The Committee examined Sonar 2087 and Skynet 5, both of which are among the projects that have begun to be delivered that involved the newer stages of procurement and the main gate. Skynet 5 is providing the next generation of flexible and survivable communications services for military service, while Sonar 2087 gives us more capable anti-submarine warfare sensors for Type 23 combat systems. Sonar 2087 was first fitted to HMS Westminster in November 2004. It completed its initial assessment in 2000, went through the main gate in 2001 and was delivered before time. There was considerable environmental engagement and care throughout the project. Such projects and the much more robust and focused Government framework that the agency now has give us hope that more recent positive trends can continue. As a member of the Defence Committee, I will take a keen interest in probing to discover the bits of the programme that are working and the way in which improvements can be made.
	The challenges of making the most of the defence industrial strategy are considerable. When the Defence Committee took evidence from my noble Friend Lord Drayson, the Minister with responsibility for defence procurement, it was fair to say, as hon. Members on both sides of the House have noted, that we were impressed by his clarity and determination. We were sceptical that the defence industrial strategy would be published before Christmas and that it would be sufficiently robust and include adequate detail. A glance at the individual chapters and the overall document is enough to discover that it includes the detail and clarity that we wanted. It has been welcomed by industry, not least in Plymouth. Paragraphs B2.26 to 28 on maritime industry provide the required clarity, and recognise the fragility of the design base and the implications of the blurring of the line between initial build, important through-life support and upgrades of systems. The Subco proposal would tackle those issues and secure value for money while retaining capability, enabling us safely to deliver, operate and maintain those platforms and supporting technologies under UK control and ownership.
	My hon. Friends can be assured that DML and its workers, and those who support them in the naval base and the MOD, know the importance of delivering on those value-for-money issues and have a good local track record. May I point out to Ministers that in recent years the company has diversified significantly? Paragraph 2.42 says:
	"Ownership of UK warship yards has consolidated to two main companies . . . BAE Systems . . . and VT Shipbuilding; with further capacity at Swan Hunter. DML and Babcock Engineering Services have design capability and fabrication skills but, together with FSL, essentially deliver surface ship and submarine support (including upkeep)."
	DML designs and builds complex and highly sophisticated super-yachts, which are equal in size and complexity to a military corvette, and it has won contracts in competition with overseas yards.
	The integration tasks in the final stages of a refit and upgrade of a major surface ship or nuclear-powered submarine are just as complex as the equivalent tasks on a new build and sometimes, indeed, are even more complex. When commissioning and setting to work naval platforms such as the future aircraft carrier, the skills base at Devonport can be used to achieve the timely and successful delivery of the imminent new-build programme. In future, there will be a significant increase in the shipbuilding programme, so capacity is a consideration. At the same time, however, a significant proportion of the skills base at Devonport will become available as a result of the downturn in the refit programme. As we develop our marine industrial strategy, I hope that we will look at the way in which we will tackle shortage in capacity. We should bear in mind the competitiveness that the Devonport work force has developed by diversifying into private sector work. I welcome what my hon. Friend the Member for Bolton, North-East (Mr. Crausby) and others said about the future of the nuclear deterrent and the importance of retaining skills and capability.
	Having raised those local issues, may I conclude with a couple of concerns about the White Paper? The Minister and others have mentioned small and medium-sized enterprises. Devonport has 4,700 employees, but the huge supply chain increases the number of workers to more 10,000 in 420 local companies. In the south-west region, 60,000 people are employed in defence work. Aerospace employs 43,000 full-time equivalent employees, and the supply chain another 100,000. I share the concerns that have been expressed about whether small and medium-sized enterprises have been fully involved in the evolution of the White Paper. There is still time to do that. I would welcome reassurances from my hon. Friend the Under-Secretary about how that can be achieved—in the case of maritime enterprises, through the industrial strategy. In relation to aerospace skills there needs to be careful involvement of those representing the industries—the trade associations, the regional development agencies and so on.
	A debate is being held in Westminster Hall on employer engagement in further and higher education, in which I would have liked to highlight the importance of the higher education innovation fund research stream in sustaining and developing knowledge partnerships. That, too, is important to some industries, particularly the small and medium-sized enterprises that we are discussing.
	Finally, I acknowledge what my right hon. Friend the Minister said about partnership and partnering being seen as the way to achieve value for money—

Douglas Carswell: Others wish to speak, so I shall be as brief as I can.
	There is something profoundly wrong with Britain's system of defence procurement. That is not my assertion, but that of Lewis Page, author of the recently published book on defence procurement, "Lions, Donkeys and Dinosaurs". Mr. Page's highly readable account of the monumental incompetence of our defence procurement regime is, I hope, on the Minister's reading list. If not, I would be delighted to lend him my copy for him to read afterwards.
	According to Mr. Page, the UK spends about £30 billion each year on defence. His book shows what extraordinarily bad value for money we get—or should I say, our soldiers get. It is a damning tale that does far more than condemn the actions of any single here today, gone tomorrow politician. Rather, it raises serious questions about the future of our defence industry and the MOD—an institution that Mr. Page compellingly portrays not so much as the Ministry of Defence, but as the Ministry stuffed with dinosaurs.
	In reminding the House of one or two instances of particularly gross MOD incompetence, I am not seeking to make partisan political points. The MOD's failings have been manifest under Governments of both parties. I am also not especially interested in which side of the House hon. Members happened to be sitting on at the time of the MOD's bungling. Rather, I seek to make the point that the incompetence of our defence procurement regime is so profound that it is time to contemplate a bold and radical alternative.
	Do hon. Members remember the SA80 rifle? They might not, but our soldiers still have to cope with it. It began life in 1985 with several glaring design flaws. The decision was taken after 1997 to spend £92 million to sort out each of the 200,000 flawed rifles. That works out as an additional £460 to make each gun function properly, after its development and production costs. The MOD asserted that that was cost effective. Had it the wherewithal, however, the MOD could have spent that £92 million on, for example, the American M16, at a mere £400 each. Instead, for reasons that are unclear to me, the MOD spent that money upgrading a rifle that no soldier, when asked to select their own weapon, would choose.

Douglas Carswell: To press on, do hon. Members remember all the Apache helicopters that we bought? It was sensible, was it not, to buy all that tried and tested American kit, yet the MOD managed to bungle even that. Israel somehow managed to buy Apaches at £12 million a piece. Somehow the chaps at the MOD managed to spend £40 million on each one of them.

Mr. Deputy Speaker: Order. The hon. Gentleman has only just walked back into the Chamber. He ought to exercise some restraint because we are running out of time. If he hopes to catch my eye later, it would be a good idea not to extend speeches; otherwise insufficient time will be left.

David Wright: It is an interesting experience to follow the hon. Member for Harwich (Mr. Carswell). I will pass on his comments about pen pushers to hundreds of my constituents who procure products for the MOD. I am sure that they will be delighted to hear what he had to say.
	This afternoon, we have heard about a series of procurement issues, including aircraft, naval products and textiles. It is important to remember that large teams of people work for the MOD procuring those items, because we have not discussed the civil servants who work in supply and purchase. More than 400 people in my constituency work in the Defence Logistics Organisation at Sapphire house. I am concerned about their future, because the MOD has proposed the collocation of a number of staff from Sapphire house to an acquisition hub in the Bath-Bristol area. I know that Ministers have not made a final decision on that matter, but rumours about the collocation proposal and the acquisition hub have been circulating. I hope that the Minister will reassure my constituents about their future in his winding-up speech.
	In July 2005, the MOD announced its plans for the acquisition hub. From August to November 2005, a combination of rumour and comments from senior management indicated that the plans were more advanced than staff realised and than the MOD would admit publicly. As has been said, the MOD purchased a building in the Bath-Bristol area to which it will potentially move staff from Telford to work on DLO acquisition activity. On 21 December last year, the Minister wrote to me to confirm the purchase of that property, which was not a nice Christmas present for staff in Telford.
	I want to discuss what makes Sapphire house in Telford unique. The procurement and provisioning support for all in-service Army equipment is undertaken at Sapphire house. That work is supported by bespoke IT infrastructure, the PUMAS and PWB systems, and it has taken place in the Telford and Shropshire area for more than 60 years. That business output to the DLO is not replicated anywhere else in the UK.
	Additional evidence of the unique role of Sapphire house is found in a key measure of the field Army's ability to deliver its military capability. That measure is called underlying availability, which defines the spares support available in the supply chain and is critical to force sustainability during both peacetime and operational periods.
	The DLO procurement reform team, DLO category managers and a small contingent administering the MOD's purchase to payment strategy are also based at Sapphire house. Those teams tap into the bespoke Sapphire house IT systems and, more importantly, utilise the Sapphire house community to interpret and capture commercial and procurement data. Sapphire house is also contributing significantly to the much-heralded—this afternoon—industrial strategy recently launched by the MOD.
	Sapphire house is also unique because it houses a number of non-DLO integrated project teams, the Defence Communication Services Agency and the integrated project teams working under the Defence Procurement Agency. That profile demonstrates integrated working and provides a snapshot of what the MOD is trying to achieve in the Bath-Bristol area. The MOD wants to collocate activity to the Bath-Bristol area, but it has already done that in Telford, so I hope that it does not move staff again.
	The DLO gets a good deal out of Telford, which is evidenced by the excellent recruitment and retention record of staff in that locality. Indeed, 67 per cent. of the work force at Sapphire house is based on administrative grades and is therefore paid a relatively small amount. The MOD gets incredible value for money from those staff. If we move their activities to the Bath-Bristol area, we will not get the same output from the same grading of staff in that locality. That value-for-money aspect cannot be replicated.
	One of the issues that local trade unions have raised with me is that although MOD proposals suggest collocation in the Bath-Bristol area, most staff in Telford will not want to move. Surveys carried out by the unions of those 400-plus staff find very few people who want to relocate their activities down to that area. People do not want to move their families down there or to break their links with the local community. In many cases, whole families have worked for the MOD in Telford, whether at the old Donnington depot or at the ESPPA—Equipment, Support, Provision and Procurement Agency—facility at Sapphire house. My concern is that if we collocate activity in the Bath-Bristol area, we will lose essential skills that we have built up through the DLO Telford teams from the ashes of the change that occurred in 1995 when the Chilwell and Donnington sites were amalgamated.
	I hope that Ministers will take a step back for a moment in relation to Sapphire house, and think about the skills and quality of the staff there in procurement terms and about what they will lose if people do not move down south in the event that activity is collocated in the Bath-Bristol area. Sapphire house is home to two bespoke IT systems and, uniquely, houses more than 330 highly skilled, fully trained provision and procurement operatives. It has a critical role in running a further 10 IT systems essential to effective inventory management and supply chain operation. This is a quality facility with staff who are very committed to the MOD.
	The staff and the trade unions have produced a so-called straw man paper that looks at alternative options. The unions are not particularly opposed in general terms to collocation, but they still see an ongoing role for MOD presence in the Telford area. The paper discusses the retention of skills and staff at Sapphire house. The proposal has been withdrawn, as the Minister confirmed, but I hope that we can breathe some new life into it and that Ministers will be willing to meet trade union representatives again to talk through the future of the paper and to see whether there are any opportunities to retain those skills and staff in Telford.
	I want to refer in closing to the comments made by my hon. Friend the Member for Vale of Glamorgan (John Smith), who mentioned the defence training review. It is important that we have a clear, transparent and open competition on defence training. I hope that the Department will pursue that line effectively. Under one option St. Athan would be the prime location; under the other option, which I clearly support as a Shropshire MP, those activities would go to Cosford. It is probably fair to say that both sites have great advantages. Both could be seen as high-quality training facilities for defence. I just want us to have a fair competition and a fair decision based on the facts. We can then move forward with quality training environments for all our people working in the MOD.

Angus MacNeil: May I associate the Scottish National party and Plaid Cymru with remarks that were made earlier and extend our sympathies to the families of the bereaved and those who have lost their lives? May I also mention the injured and the wounded, who must not be forgotten by Government of whatever shade, or by this Parliament, for the rest of their lives?
	I intend to keep my remarks short. Many issues have already been mentioned, and I hope that as a result of my brevity the Minister will respond to the specific points that I raise.
	There are many aspects of defence procurement, but I want to concentrate on one specific issue. I am, of course, honoured to take part in this debate as the elected representative for Na h-Eileanan an Iar. An aspect of chief concern to my constituents is Qinetiq and the possible impact of its privatisation on the future livelihoods of 240 at the Hebrides base between North Uist, South Uist and Benbecula. It has been reported that Qinetiq in general has about 5,000 patents granted and outstanding. A great deal of intellectual property is clearly being sold, the value of which would be very hard to quantify.
	As some hon. Members know, the Qinetiq range in Uist is large and stretches far to the west beyond St. Kilda. There is no land beyond that except Rockall on the way to Newfoundland and Canada. It is an ideal place for missile testing.
	Missiles are critical to modern military activity, as the hon. Member for Aldershot (Mr. Howarth) asserted earlier. Given that they are critical, we need to retain the capability for testing and training.
	I was recently fortunate enough to visit the Qinetiq range and see some of the highly skilled and specialised work that the operatives undertake. The Hebrides base is a tremendous facility. Its size gives an almost unique controlled environment for the conduct of test and evaluation firing of land, sea and air weapons, and the firing of in-service missile systems.
	The base also accommodates the operation of unmanned air vehicles—UAVs—which are used for missile training, especially for the Rapier missile. It is encouraging that use of the base is not confined to the UK armed forces. Recently, the Swiss and Swedes, among others, have used the resource and expertise at the base. I have travelled with ferry-loads of American soldiers, stationed in various parts of Europe, who find it far more convenient to go to Uist to train with missiles than to return to the United States.
	I would like an assurance—if possible, a cast-iron guarantee—that the privatisation of Qinetiq will not put the range at Uist at any risk. Does the Minister view the Hebrides range as a key capability in the context of the defence industrial strategy? How can the Minister guarantee that, some day, under pressure from shareholders—some as far away as America—a private company will not close such a strategic facility in some sort of rationalisation of Qinetiq?
	Indeed, the same could be said of other Qinetiq sites in Scotland such as Rosyth, Wester Ross and many others. Can the Minister guarantee the continuation of those bases when a key part of the defence industry is privatised? Viability might no longer be determined by strategic importance but by shareholder considerations and the bottom line.
	It could be argued that defence procurement budget spending in Scotland is, in terms of per capita spent, approximately £500 million lower than it should be. However, tempting as it is to trade such statistics with the Minister, I should like him to concentrate on the position of Qinetiq and how it affects Scotland.
	I currently question how we can be certain that a private company in a monopoly situation cannot hold a Government to ransom when we have no other provider. Could it not add to the problem of cost overruns?
	To achieve my aim of brevity, I shall make only two further points. The public cannot buy shares in Qinetiq. Only those who are described in common parlance as fat cats can do that. Why will the Qinetiq working man or woman in Uist or Rosyth be allowed to purchase only £500 in shares when the top brass walk away with £40 million? Is that not a slap in the face for the hard-working employees at Qinetiq? Is it not a slap in the face for every hard-working man or woman who, like my father, once believed in Labour values and traditions?
	More than a year ago, 10 RAF personnel tragically lost their lives in an air crash in Iraq when a right wing fuel tank exploded. An RAF pilot, Nigel Gilbert, has been reported as saying that the consequences might not have been so serious if the aircraft had been fitted with fire retardant protective foam, without which the Americans and Australians would apparently not fly. I am no expert but I and, I am sure, many others would be grateful if the Minister shed some light on that.

Maria Miller: I am grateful for the opportunity to speak in today's debate, which is important not just because we are discussing the future defence of our country and £6 billion of Government expenditure on procurement each year, but, as the hon. Member for Chorley (Mr. Hoyle) said earlier, because defence is at the heart of much of Britain's manufacturing industry. Much of the expertise and many of the jobs in the sector are inextricably tied to the future of defence in this country. In my constituency, Basingstoke, in north Hampshire, we have a great deal of expertise in the sector, which provides a tremendous skilled work force. Importantly, it is also a catalyst for many other businesses in the area, which rely on our defence industry for their livelihood. It is therefore vital that we hold the Government to account in this important sector.
	Despite the smart procurement initiative introduced in 1998—I recall, however, that my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot) said that its roots might lie deeper in time—important defence projects are still regularly coming in over budget and late, which in any other sector of industry would be unimaginable. I reflect on the fact that the most recent National Audit Office report on major projects in 2005 found that the largest projects are almost £3 billion over budget, that financial savings are coming solely from cuts in future capability and not necessarily from efficiencies, and that delays in delivering projects have increased by 45 months. The MOD identified that many of those time and cost overruns were driven primarily by its actions, such as changes in specifications and budget constraints.
	It is therefore little wonder that, for the Government, defence procurement is an ongoing process of attempting to reduce waste and ineffective management control. There have been no fewer than four iterations of defence procurement rules since 1997, creating a great deal of change in the sector. The Government's strategy over that time, as I try to piece it together, seems to be to achieve a better balance between best value and protecting domestic research and manufacturing capability. Of course, the Government's push for an increase in competition in the sector should be applauded, although the NAO report suggests that there is some way to go until we see the full fruits of that labour.
	Unlike many other sectors of manufacturing industry, however, the defence industry does not operate in a perfect market, and there is a need to balance the protectionist drivers—sovereignty and the need for national security—with the best-value drivers, such as the need for open competition, innovation, control of costs and avoidance of the unseemly delays that we note in many of these projects. As has been pointed out, we have one of the most openly competitive defence industries in the world. For several years, however, procurement rules have recognised the need to balance the protectionist and best-value approaches so as to take into account the importance of retaining domestic capability in the market. In my constituency in particular, we want to retain skills as well to deliver value for money.
	I was pleased that the 2005 defence industrial strategy identified yet again the need to retain strategic capability. I welcome the list of key strategic capabilities that we need to keep domestically. One of my local employers, Thales Missile Electronics in Basingstoke, has been identified as having an important strategic capability and an important role, particularly in fusing, in the complex weapons sector.
	Let us consider what has been asked of companies that have been identified as needing to provide important strategic capability. The defence industrial strategy is somewhat contradictory. It talks of best value and the need to maintain national security, but also talks explicitly of the need to retain the ability to source from abroad, as well as the ability to design, assemble and support domestically. My right hon. Friend the Member for Fylde (Mr. Jack) said that it was almost as if the report was trying to have its cake and eat it, or the Government were.
	The strategy readily acknowledges that open international competition could put the sustaining of key industrial capabilities at risk. The Minister said that it clarified priorities. That may be his objective, but he has some way to go. He must make absolutely clear what we are asking of our local defence manufacturers. There is rather more than a contradiction here. We need to know what message we are sending to our domestic defence industry. I believe that the Government are reviewing the way in which the strategy is to be implemented; perhaps they could think about that message during the process.
	We must ask ourselves whether we are retaining our key strategic capability if manufacturers are forced by cost pressures to outsource large parts of their production to lower-cost countries in order to compete in terms of price. Eventually local production, and indeed capacity and skills, will become increasingly diluted, and our ability to be flexible and respond to the needs of the military—especially at times of pressure—will become more problematic. There must be more formal recognition of the trade-off between price and strategic capability.
	As I said at the outset, we are discussing the future defence of our country. We are discussing a vast area of Government expenditure. However, we are also discussing the future of an important sector of industry and manufacturing. After four iterations of defence strategy in the Government's lifetime, we must work hard to ensure that we get it right this time.

Tobias Ellwood: It is a pleasure to follow my hon. Friend the Member for Basingstoke (Mrs. Miller), who spoke with such passion about the industries in her constituency. Thales is and, I hope, will continue to be an important component of our defence industry.
	The Chairman of the Select Committee, my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot), drew a distinction between our procurement needs for defence and the country's needs. They are separate but also together: separate in that we can have a defence industry that can have exports, but together in that our defence—Army, Navy and Air Force—will be one of the biggest markets for our products and equipment. We have not talked much about the former, but I want to say something about the latter.
	I understand that there is an annual debate on procurement. I hoped that this debate would include an audit, or analysis, of our requirements. We have heard a good deal of talk about where pieces of equipment are in the procurement process, but what are our needs? Why do we require that equipment to meet the challenges of the future? The Minister mentioned our needs in Afghanistan and the threat posed by the growth of terrorism, but I should have liked him to spell out exactly what our mission is and how it relates to our NATO obligations. We are part of NATO; we also work closely with the United States and the Commonwealth. Why must we provide all the equipment and all the manpower all the time? As the costs are limited, we should be sharing the financial burden with our allies, in Afghanistan, in Iraq or anywhere else. In future procurement debates, it would be useful to hear how we fit into this bigger picture, given that we are constricted by the total amount that we can spend.
	The Minister said that spending has in fact increased in overall terms, but the reality is that we have fewer soldiers, sailors and pilots, and fewer regiments, ships and squadrons. However, the obligations that we place on our military personnel have increased substantially. Our armed forces are therefore greatly overstretched, woefully undermanned and dangerously ill-equipped. As someone who served in the armed forces, it is quite upsetting to hear that £4.8 billion has somehow gone missing, according to the National Audit Office. That is a phenomenal sum, particularly given the basic equipment that we provide for our front-line soldiers.
	There was something of a spat earlier—swords at dawn, as it were—about the red lines and who is actually to blame. I am very new to the House and in fact, I do not care where the blame lies for past events; I want a solution for a future. So whether past Governments or today's Government are to blame, let us learn from experience and ensure that such mistakes are not made in future.
	A litany of examples of the various problems has been given. My hon. Friend the Member for Harwich (Mr. Carswell) spelled out the problems associated with the SA80. The Apache was purchased—can you believe it, Mr. Deputy Speaker?—without the training manual. Chinooks, which can fly only in good weather, were also purchased. Hercules that were purchased in 1999 have still not been cleared for use by paratroopers. These are schoolboy errors and they need to be corrected. There is also the example of the Clansman radio. When I was in the Army, we dreamt of the Bowman radio system, which was to be the panacea to all our communication problems. I was well aware that, when we were in Bosnia, we were using an insecure radio system. Giorgi, the local radio ham who worked in Sanksi Most, could hear us, but so could the enemy. We were using 30-year old kit. That should never happen in a sophisticated Army such as today's. There are other examples, such as the Astute class submarine, which was £1 billion over budget.
	I want to discuss the F-35, the joint strike fighter, but before doing so I want to deal with Galileo, which has yet to be mentioned today. No one has explained why we are purchasing a new global positioning system when we already have one that works and is free. Galileo, which consists of 30 satellites and mimics GPS, will cost £2.2 billion and has a running cost of £5 billion. It is backed by the EU but it is being pushed by France and Italy. Given that military equipment can run off GPS, and that we already have a free GPS system, it would be useful to hear from the Minister why we are purchasing a comparative system.
	The JSF is designed as a replacement for the Sea Harrier, but if matters proceed in the way suggested today, the new aircraft carriers due in 2012—HMS Queen Elizabeth and HMS Prince of Wales—are likely to be launched with no aircraft on them. I understand that this year—perhaps the Minister can clarify this point—we are to lose all our Sea Harriers, which means that there will be no radar platform to support and protect our carriers. The T45 has been launched, which has a radar facility that could be used to assist our carriers, but its range is limited to the horizon. The great advantage of the Sea Harrier and the F-35 is that they have a radar range of some 300 miles. For six years, our carriers will lack security at sea.
	Other problems have been referred to today, such as the budget cuts in America. Such cuts have come not only from Donald Rumsfeld, but from Capitol hill itself. There is also the question of technology transfer and the Americans' reluctance to hand over the technology necessary to repair and maintain the F-35.
	Another problem has to do with the date of implementation. I hope that we will have two wonderful aircraft carriers in 2012 but, even if everything goes to plan, it is likely that we will have no aircraft to put on them for another two years.
	Some hon. Members have said that, because we joined the Americans in the Iraq war, they should show their gratitude by giving us back this technology. I take issue with that. I made it clear that I opposed the Iraq war, and do not think that it should have anything to do with this matter. Our very strong relationship with the Americans is based on the fact that we share technology and intelligence: in the absence of the waiver, that is a factor that must be taken into consideration.
	The American House Committee on International Relations is at the core of the problem, not the Americans in general, and we should focus on the ITAR regulations. It is important that Ministers and Tony Blair take every opportunity—

Edward Vaizey: I am grateful, Mr. Deputy Speaker, for your indulgence in allowing me to speak, and I apologise for my absence during some of the debate. However, I assure the House that I kept abreast of developments on television, and that hon. Members look even better through that medium than they do in the flesh.
	I am also pleased to follow my hon. Friend the Member for Bournemouth, East (Mr. Ellwood), who made an eloquent speech. His points about America were reflected widely in the debate, but defence procurement is an incredibly important subject. The systems involved both protect our soldiers and put them at risk, so procurement mistakes can cost lives. By definition, those systems cost millions and millions of pounds, so the scope for waste is easy to imagine. Given that procurement involves politicians, officials and public money—and the fact that the armed forces change their requirements every year—it is almost essential to build in natural waste.
	Several hon. Members have welcomed the defence industrial strategy, and I am happy to do the same. The work done by Lord Drayson has been widely welcomed and is regarded as a good thing. I agree, and I hope that my praise does not undermine his career. However, despite the consensus with respect to the early stages of the strategy, I hope that the Government will take very seriously the report that will eventually emerge from the Defence Committee on how the strategy is working. That report should be studied carefully.
	I have read, as my hon. Friend the Member for Harwich (Mr. Carswell) has, Lewis Page's book, "Lions, Donkeys and Dinosaurs". It is a quick, enjoyable and highly polemical read. I imagine that it has caused no end of irritation in the corridors of power. I suspect that it makes many valuable points and I am also sure that it misses its target on many occasions. It led me to think about the principles that we should adopt in defence procurement.
	One principle that has emerged from the debate is that we are all anxious to keep some home-grown capability. It is not simply about jobs; it is also about the wider spin offs of technology transfer and negotiating muscle—of being able to bring something unique to the table. As a layman who is new to the defence debate, it is slightly tragic that we can no longer produce on our own an aircraft, like the Hawker Harrier, which has given us such useful service and was so innovative.
	It is worth hon. Members remembering that our special relationship with the United States is between the people and, often, a Prime Minister and a President, but is rarely between Parliament and Congress. As my hon. Friend the Member for Bournemouth, East (Mr. Ellwood) pointed out, it is Congress that is causing the difficulties. We as a nation should look further afield for other partners. I was lucky enough to go to India earlier in the year where I met the Indian Defence Minister and Chief of Defence Staff. They are hoping to be 95 per cent. self-sufficient in providing their defence capability. I ask the Minister in a genuine spirit of inquiry what we are doing to build relationships with emerging nations like India. India will soon be the largest country in the world. By 2030 it will be the third richest nation in the world. Surely we should now work on our special relationship with India in terms of our defence capability. I would be fascinated to hear from the Minister what we are doing on that basis. [Interruption.] Absolutely, we are selling Hawks to India, but what are we doing about developing home-grown defence technology with that country?
	The other point about defence procurement is that it does not stop when we hand over the cheque and get the kit sent over. Errors can continue long after the kit has been purchased. I am aware, for example, that the Apache helicopter, which we have purchased, is hugely short of spares. The maintenance lines that were meant to be set up at Watersham are still not set up. We have a shortage of flying instructors and have had to reduce the number of pilots on each course from 24 to 18. Parts are being cannibalised. When the Apache Squadron goes to Afghanistan, the training fleet here will have to be effectively mothballed. It was amusing to be told by my source, who of course will remain nameless, that when the Minister saw a display of two Apache helicopters last week, there were four in reserve just in case one of them broke down.
	Finally, please do not forget the Army. It is the poor relation in this debate. The Air Force is getting its new fighters. The Navy is getting its new ships. The Army is still waiting for the future rapid effect system. It is incredibly important that our troops have rifles, boots and clothing made here, not in China, and a new generation of armoured vehicles.

Mark Harper: I am grateful to the Minister for putting that on the record.
	Before I start properly, I must comment on something else that the Minister of State did today. The occupant of the Chair had cause to guide him earlier in his remarks about keeping to the terms of the debate. Yet, as the Minister ranged widely across a number of defence matters, he did not find time to refer to his written statement issued today, which announces a significant number of job losses relating to the Defence Aviation Repair Agency. It is typical of this Government that they made that announcement under cover of a written statement at the same time as this debate on that very subject. The Minister announced the beginning of the review in an oral statement. Why did he not use an oral statement to announce his final decision, especially given the large number of jobs at stake? Could he not face the comments from Labour Back Benchers, or did he not want to remind them of the £104 million wasted on the Red Dragon facility? Perhaps the Under-Secretary will comment on that when he winds up.
	Defence is the first duty of Government and it is critical to fund our commitments properly. The strategic defence review in 1998 stated that
	"all three services have been over stretched because of the demanding pattern of our operations".
	The then Secretary of State, Lord Robertson, said that he was determined to put that right. However, since then, spending has declined from 2.7 per cent. of GDP to 2.3 per cent., and that is at a time when our commitments and operations have increased, and the challenges that we face are more unpredictable.
	It has been said:
	"Too often in the past our new equipment has been too expensive and delivered too late."
	Those are not my words, but the Government's in the SDR. If the Government recognised the problem correctly, they failed to fix it. In his opening remarks, my hon. Friend the Member for Aldershot (Mr. Howarth) laid out the record of overruns, highlighted by the National Audit Office, and the failure to deliver, with major procurement projects falling behind and delays increasing by 45 months over the past year. At that rate, we will never get the equipment.
	Because of the failure to properly fund our commitments, the cost overruns and delays have forced the Ministry of Defence to seek savings. But rather than improving efficiency, the NAO has concluded that the Government have cut future capabilities and the number of platforms instead, leaving us less able to deal with the security challenges of the future.
	On the subject of submarines, the Minister spoke of keeping a skills base in the long term and retaining the industrial capability of our submarine industry. Will he comment on the future of that capability after the construction of the Astute class has been completed in 2010? How will we maintain our skills base and what capability will be retained if there is a significant production gap between the completion of the Astute class and the potential replacement of Trident?
	The nuclear deterrent has not been mentioned much, apart from in the excellent contribution by the hon. Member for Bolton, North-East (Mr. Crausby). Our position on the nuclear deterrent is unequivocal: we are committed not only to retaining the current nuclear deterrent, but replacing it when necessary. We welcome the Defence Committee's inquiry into the strategic context and timetable for decision making for the replacement of Trident. I am sure that the Minister will also welcome the start of the debate on that issue.
	The increasing use of the private finance initiative to fund procurement projects raises the concern that we may be tying ourselves into very long-term contracts that may reduce our flexibility to react to developments in this fast changing world. That is a matter that we will no doubt revisit in the future.
	As my hon. Friend said, Government spending on defence research is critical to producing the battle-winning capabilities that we have seen to great effect in recent operations. However, research and development is being marginalised—spending on research and development fell between 2002–03 and 2003–04. The foundation of a solid defence industry remains research and development. Therefore, it is particularly worrying to read in "Defence Industrial Strategy" that there is a danger that
	"we could become increasingly dependent on defence technology solutions generated by other countries".
	Unless sufficient attention is given to defence research in the near future, the long-term sustainability of our future capabilities is called into question.
	The Government have an opportunity to demonstrate their commitment to fund defence research properly when they sell their stake in Qinetiq. Will the Minister confirm how much will be retained by the Ministry of Defence for investment in our future defence, and how much will be taken by the Chancellor to plug the gap in his finances?
	The Minister referred to the joint combat aircraft. It really is no good for him to say that there is no plan B. That sends a signal of weakness to our US partners, who will have us over a barrel. I hope that he will urgently develop a plan B and, as my right hon. Friend the Member for North-East Hampshire (Mr. Arbuthnot), the Chairman of the Defence Committee, urges, publish it to the House to strengthen our negotiating position with our US partners.
	The debate was wide-ranging, with many contributions, and I shall touch briefly on some of them. My right hon. Friend the Member for North-East Hampshire demonstrated the link between procurement and its impact on our service personnel deployed on operations, which is valuable and sometimes overlooked in these debates. My hon. Friend the Member for North Dorset (Mr. Walter) reflected the scepticism of defence training organisation personnel about the proposed public-private partnerships.
	My right hon. Friend the Member for Fylde (Mr. Jack) spoke about the importance of fast jet manufacture in the UK and was one of several Members who emphasised the significance of technology transfer from our US allies. My hon. Friend the Member for Harwich (Mr. Carswell), in forthright style, challenged conventional wisdom on defence procurement and I am sure that we shall hear more from him on the subject.
	My hon. Friend the Member for Basingstoke (Mrs. Miller) spoke about a number of important issues for her constituency and about the balance between sovereignty and cost control. My hon. and gallant Friend the Member for Bournemouth, East (Mr. Ellwood) focused on the requirements for defence procurement, which had not been widely touched on during the debate. He also spoke about burden-sharing with our allies and the overstretch of our forces. My hon. Friend the Member for Wantage (Mr. Vaizey) rightly reminded us of how high the stakes are in terms of money and, more important, lives.
	There were excellent contributions from other Members. I endorse the remarks of the right hon. Member for Edinburgh, East (Dr. Strang) about the late Rachel Squire's commitment to all matters defence. The hon. Member for Bolton, North-East, vice-chairman of the Defence Committee, spoke of the value of our relationship with the United States. His robust support for the replacement of our nuclear deterrent is welcome, at least on the Conservative Benches.
	The hon. Member for Merthyr Tydfil and Rhymney (Mr. Havard) spoke about the importance of value for money and highlighted the significance of lift capability. The hon. Member for Vale of Glamorgan (John Smith) referred to the importance of open defence markets and the bracing effects of competition.
	I am sorry that I missed the barnstorming speech of the hon. Member for Chorley (Mr. Hoyle). He agreed with my hon. Friend the Member for Aldershot that we must not write off the future of manned combat aircraft, and rightly condemned the proposed loss of a national capability to manufacture explosives, which is very important in his constituency. The hon. Member for Colchester (Bob Russell) made a detailed critique of the loss of specialist military textile research facilities.
	The hon. Member for Plymouth, Sutton (Linda Gilroy) reviewed some of the work of the Defence Committee and spoke about the importance of the naval aspects of the DIS. The hon. Member for Telford (David Wright) noted the significance of the defence logistics facility in his constituency.
	The hon. Member for Na h-Eileanan an Iar (Mr. MacNeil)—the name of whose constituency is a speech for someone from England such as me—referred to the importance of Qinetiq and other sites in Scotland. The hon. Member for Portsmouth, North (Sarah McCarthy-Fry) spoke of the experience she brought to bear on how to achieve value for money. She referred to risk-sharing and drew attention not just to the large players in defence, but also to small and medium-sized enterprises.
	As we prepare to send a large number of our brave and dedicated forces to Afghanistan, it is essential to ensure that we give them the proper tools to do the job. The key test for the DIS will be whether the Chancellor funds it properly. His past performance is not encouraging. The nation will be watching and will judge him harshly if he lets us down.

Legal Services Commission (Wales)

Julie Morgan: I thank my hon. Friend for that information, which echoes the intense lobbying that I have had over the past week or so, and reflects the intense disquiet in Wales and England.
	The Welsh service provides a formal training programme which is tailored to the needs of advisers identified over the helpline and through other feedback. The pilot project in Wales was thoroughly evaluated, including peer review of advisers' work, as late as 2004. Following that evaluation, the Legal Services Commission decided to incorporate the programme into its mainstream services. In Wales new three-year contracts were let from February 2005, which is only a year ago. The contractors in Wales are Morgans, Solicitors and Shelter Cymru, which deliver the service under a partnership arrangement. In England the three-year contracts were signed in March 2004, and in the light of the new information will be ended eight months early.
	Across England and Wales the Legal Services Commission also provides specialist support services in immigration, community care, mental health, HIV/AIDS, employment and human rights, which are delivered by a mixture of voluntary organisations and firms of solicitors in private practice.

Julie Morgan: Absolutely. It has been acknowledged by the Legal Services Commission that the advice given is quality legal advice, as my hon. Friend says.
	Two weeks ago, the providers of the service were given six months' notice and told that the service would stop in July 2006, with no apparent plans to replace the essential service that they have been providing. This has caused consternation and disbelief, especially since the Legal Services Commission evaluation and peer review of the service was so favourable.
	The evaluation report states, for example, that specialist support is a distinct alternative method of delivery, it increases access to legal advice, it is used by more voluntary agencies than by private solicitors, it is friendly and helpful, users felt that the services were of high quality, clients' cases were progressed faster, unwinnable cases were stopped and, in addition, the benefits of the Community Legal Service meant that it should become a mainstream contracting option. The evaluation also concluded that there was need for a service specially targeted at Wales, owing to the need for specific Welsh legal knowledge. The evaluation was done as recently as 2003. This complete change in direction is hard to understand.
	Following the evaluation, the Legal Services Commission decided to incorporate specialist support into its mainstream services and new contracts were let in 2005. However, the contracts contained a clause that enabled the Legal Services Commission to give six months' notice of termination, and it has now announced that it will be terminating the service.
	It appears that there was no consultation with the Welsh Assembly Government on the Welsh service, and the Minister responsible, Edwina Hart, has written to me expressing her disappointment about that lack of consultation, despite mechanisms being in place, and I believe that she has written to the Minister as well asking for the Minister to look again at this decision. It is obviously important that the Westminster and Welsh Governments work closely together on an issue such as this which straddles the responsibilities of both Governments.
	The rationale that the Legal Services Commission has given for the termination comes in its top-slice budget review. It says:
	"There is no doubt that the Specialist Support Service contractors are excellent specialist advisers in their field",
	but says that it cannot afford to pay for second-tier specialist advice to first-tier advisers when they are supposedly contracting with specialists to provide front-line services. The Legal Services Commission seems concerned that it is paying twice for the same service, but it is not. The specialist support service does not duplicate the work of front-line advisers.
	The Legal Services Commission ignores the fact that many front-line advisers are not solicitors and belong to organisations that do not have legal departments, and that the support service provides invaluable support to first-tier workers who do not necessarily have the legal expertise to deal with certain cases. The specialist support service ensures that good quality advice is given to those who need it most. It has been successful, and it has been acknowledged to have been successful.
	The Legal Services Commission also seems to be ignoring the fact that the main role of the specialist support service is to raise standards among first-tier advisers—to enlarge their knowledge and skills, boost their confidence and encourage them to stand up and fight for those who are socially excluded, and one needs support and expert help to do that.
	In addition, the specialist support categories concern complex areas of law, and contact with a specialist means that a front-line provider, who may have difficulties finding time to research the law, can rely on the expertise of a specialist who has the knowledge to hand, and that can apply to local solicitors as well.
	There is also a scarcity of highly skilled advisers in specialist support subjects, particularly in housing, welfare benefits and debt, and particularly so in Wales. I had understood that the Legal Services Commission recognised this problem and the need to raise skill levels and promote recruitment into these disciplines. The specialist support service helps build the skills of non-solicitor advisers. Without mentoring and training, I fear that many firms and agencies will muddle on, but will give poor or incomplete advice, and that the rights of the poor and disadvantaged—through no fault of these firms or agencies because they will be losing this specialist help—will go by the wayside.
	The decision to end the service is likely to result in the loss of a wealth of experience and will put at risk these innovative ways of reaching out to advisers and the resulting encouragement to raise their skill levels.
	I have had a host of case studies sent to me since it was known that I was to have this debate, particularly in housing, where many evictions have been avoided by the actions and expert knowledge of specialist caseworkers; in welfare benefits, where some cases have been stopped from going to court and in some cases the amount of an individual's entitlement has been doubled; and in debt, where an enormous amount of work has been done. As one solicitor who uses the service said:
	"We wouldn't have known where to begin without you."
	The front-line tier services are very dependent on the specialist advice that they are having.
	I am particularly concerned about the loss of the Welsh service, which will hit Wales very hard, with its higher levels of deprivation and housing need, and the significant occurrence of housing, benefit and debt problems. Geographically, a lot of Wales commands EU objective 1 status. The statistics show that the Welsh service is much valued and much used. During the 12 months from 1 January 2005 to 31 December 2005, the level of service given by just one agency in Wales is shown by the fact that there were 1,997 acts of assistance; 131 organisations were assisted, assistance often being given to four or five different advisers within one organisation; 182 people attended formal training courses; 47 people attended informal workshops; and 45 people attended housing law forums.
	The legal aid practitioners group has said that the Legal Services Commission is being short-sighted, because the service has provided a lifeline to many people. Richard Miller, who is a director of the LAPG, has said:
	"It has been one of the major success stories of the first five years of the LSC."
	Roy Morgan, principal of the Cardiff firm Morgans, which delivers the service, and LAPG chairman, has said:
	"The damage that will be done to access and sustainability is immeasurable."
	On Tuesday, I received a letter from the Speakeasy advice centre in Cardiff, which has used the service. It paid tribute to the way in which the service has enabled it to deal with complex cases for their clients and enlarge their knowledge and skills.
	The Department for Constitutional Affairs document, "A fairer deal for legal aid", discusses delivering a fairer deal and helping vulnerable and disadvantaged people to solve their disputes faster. It states that one key barrier to providing effective advice earlier is the existence of areas in which people cannot get advice—advice deserts. Since 2000, many solicitors have voted with their feet and left legal aid work, which has created areas of the country in which there is no solicitor or agency with a LSC contract in a subject relevant to the client. As a result, the LSC has become increasingly dependent on voluntary sector agencies to deliver legal services in social welfare categories, but one cannot expect those caseworkers to have the in-depth knowledge provided by the specialist service.
	The specialist support service was seen as a welcome reform. The initiative was designed to improve services for poor and vulnerable people, and a single body, the LSC, was charged with planning and directing a comprehensive pattern of legal services. It was a radical step in an environment that often seems to be all stick and no carrot for legal aid practitioners and voluntary organisation advisers, and it was a positive measure that helped agencies equip themselves to meet the higher advice standards urged upon them.
	I cannot overstate the strain on front-line practitioners who work with homeless people or in other difficult areas. I sincerely hope that there is a chance to save the specialist support service, which plays a vital role in providing top quality advice and training. I urge the Department for Constitutional Affairs to ask the LSC to reconsider the matter, because the service has proved its worth. Practitioners from all over Wales and England have told me how difficult it will be to manage without expert help, but we want people who have few resources to access the best help, which the service provides. I urge the Minister to reconsider the decision.

Bridget Prentice: I congratulate my hon. Friend on securing this important debate and speaking so passionately on behalf of the must vulnerable in our society. The Legal Services Commission is the public body charged with the planning and delivery of legal aid, and it has recently taken the difficult decision to stop funding specialist support services. Specialist support services provide additional assistance to organisations that already hold legal aid contracts and which therefore have to meet the commission's quality criteria.
	I assure hon. Members that the quality principle will continue and that there is no question of undermining it. There are well-established mechanisms for monitoring the quality of specialist advice and services provided to clients. The specialist support contracts are worth about £2.9 million. With that sum, the commission can help a significant number of people with their legal problems. Although those particular contracts have been withdrawn, I assure my hon. Friend that the money is being reinvested in civil legal aid. Instead of the money being used to pay people to advise lawyers, it will be spent on paying lawyers and advisers to give more advice directly to more consumers. That sum could translate into several thousand more acts of advice and assistance.
	I agree with my hon. Friend that there is no reason to doubt the quality of the advice that specialist support contract-holders have been providing. The Legal Services Commission is very keen that clients should continue to benefit from the expertise of those people who have been delivering specialist support service advice.

Keith Vaz: I know that my hon. Friend has a difficult job, and she does it extremely well, nevertheless, we are talking about £3 million out of a budget of £1.1 billion. Has she received any evidence to suggest that that money is not being properly spent?

Bridget Prentice: The commission launched a consultation strategy on making legal rights a reality and it discovered that the high level of need for first-tier, or direct, consumer advice was not being met and that far more must be made available. It is vital that we act to try to redress that gap. The commission believes that refocusing these resources on advice given directly to the consumer, rather than to the lawyers who then go on to advise the consumer, would provide a much better service to a far larger number of people.
	That is particularly essential in places such as Wales, which has large rural areas. The commission is working with the Welsh Assembly Government more closely than ever before. When it carried out its consultation on the future of legal services, it consulted the Welsh Assembly Government on their strategy for civil legal aid and the Community Legal Service. It is keen to receive views from the Welsh Assembly and to continue to work with them to identify how we best use limited resources. Together, and in partnership with the Welsh Local Government Association, the commission is identifying the areas in which it will be most fruitful to pilot the delivery of client-focused and integrated face-to-face specialist advice services that will provide a one-stop system to help people to use the law in tackling their problems.
	The commission is increasing the services it provides by telephone. In Wales, Community Legal Service Direct provides free information, help and advice direct to the public on a range of common legal problems through its helpline, website and leaflets. All those services are available bilingually. During 2005, there were almost 8,000 calls to the telephone service from Wales, of whom 6,500 were from clients wanting to speak to an adviser, which resulted in 4,500 specialist cases being advised on. The commission is tendering to expand the capacity of CLS Direct to take calls and advise Welsh-speaking callers on welfare benefits, debt and housing.
	In taking forward the vision set out in "Making Legal Rights a Reality", the commission and its partners are building on the existing successes of the Community Legal Service in Wales, which is already helping more people. By the end of November last year, it had undertaken 8 per cent. more acts of specialist advice and assistance in this financial year compared with the same period in the previous year. It has reversed a previous decline.
	After close working with the Welsh Language Board in August last year, the Legal Services Commission launched a consultation paper on its proposed Welsh language scheme. The commission will continue to work with the Welsh Language Board on the implementation of the final scheme at the beginning of April.
	I should like to take the opportunity, which has arisen thanks to my hon. Friend the Member for Cardiff, North, to announce, on behalf of the Legal Services Commission, new funding for four additional outreach money advice workers in Wales via the Treasury's financial inclusion fund. That will help deliver the cross-government over-indebtedness strategy. The projects will be of enormous benefit to those people in Wales who most need specialist money advice. I believe that all my hon. Friends agree that there is an increasing need for such advice in all our constituencies. The commission will shortly make further announcements about additional services in England.
	Other notable Community Legal Service work in Wales includes a housing possession court duty scheme, which provides an invaluable emergency advice and representation service to those in immediate danger of losing their homes. The commission has also funded 12 local projects through the partnership initiative budget, some of which have also benefited from a joint funding arrangement with the Welsh Assembly Government and the then Community Fund—now part of the Big Lottery Fund.
	Those include the Connect 2 U project, run by Torfaen county borough council, which provides information and advice on benefits, debt, consumer rights, housing, employment and immigration problems via video links from libraries and from the council's customer care centre to the citizens advice bureau, the trading standards department and other council departments. Another initiative, on which I am especially keen, is the young people's advice and information project run by Caerphilly council citizens advice bureau. It provides a welfare benefits and debt advice service targeted at young people.
	I hope that my hon. Friend will be assured that the Legal Services Commission is working closely with agencies in Wales to ensure that the desperately needed aspects of legal advice are indeed being resourced.

Nia Griffith: Does my hon. Friend agree that it can sometimes be a long process for someone to explain a situation to what we might call a lay adviser? That time would be well used, because the lay adviser would take up only a small amount of time from the specialist adviser. This is particularly relevant given the geography of Wales. For example, it is difficult for many of my constituents to benefit from some of the services that the Minister has mentioned. I therefore ask her to reconsider this matter. We need to think carefully about how we use volunteer time, which we have all agreed we want to promote.

CORRECTIONS

Official Report, Thursday 26 January 2006, in column 1573: Division No. 144, under "Noes", delete "Lidington, Mr. David"
	Official Report, Monday 30 January 2006, in column 79: Division No. 145, under "Noes", insert "Field, rh Mr. Frank"